Approval of Liquidation Plan
BlockFi customers can finally see a glimmer of hope as a New Jersey Bankruptcy Court has given the green light to the company’s liquidation plan. In a Sept. 26 court hearing, Bankruptcy Judge Michael A. Kaplan approved BlockFi’s third amended Chapter 11 plan, putting an end to a long series of amendments and legal battles.
The Road to Liquidation
BlockFi first filed its liquidation plan back on November 28. After that date, it seemed like a game of legal Whac-A-Mole with the company hastily submitting revised plans. These came in the form of a first, second, and third amendment on May 12, June 28, and July 31, respectively. Each amendment intended to address the concerns raised by the creditors regarding the company’s management and financial dealings.
Impact of Legal Battles
The amount paid out to BlockFi’s unsecured creditors largely hinges on the outcomes of ongoing legal disputes with FTX and other bankrupt crypto firms. So, if you thought you were just going to waltz into payment, think again. You might want to get cozy with some legal jargon!
Settlement with Creditors Committee
The approval of the liquidation plan came after BlockFi settled a protracted dispute with its creditors’ committee. Thanks to this settlement, BlockFi was able to reduce administrative fees and expenses that could have further eaten into any potential payouts. The creditors’ committee acknowledged this win for the company in a September 25 filing.
Who’s Getting Paid?
BlockFi’s financial situation is dire. Estimates suggest it owes up to $10 billion to over 100,000 creditors. The company’s three biggest creditors are looking at a whopping $1 billion in claims, with an additional $220 million attributed to the now-defunct hedge fund, Three Arrows Capital. So, while some people may get their money back, others might just be staring at their empty crypto wallets for a while.
