Crypto lender BlockFi gets court nod for plan to repay customers
The customers of bankrupt cryptocurrency lending platform BlockFi are one step closer to being paid out after a United States Bankruptcy Court in New Jersey approved its liquidation plan.
Bankruptcy Judge Michael A. Kaplan approved BlockFi’s third amended Chapter 11 plan in a Sept. 26 court hearing, a filing on the same day shows.
The amount of repayment received by BlockFi’s unsecured creditors will largely depend on whether BlockFi succeeds in its legal battle against FTX and other bankrupt cryptocurrency firms.
BlockFi filed its first liquidation plan to the bankruptcy court on Nov. 28 but was then required to submit a first, second and third amended plan n May. 12, June. 28 and July 31 respectively, court filings show.
BlockFi’s liquidation plan was approved after the firm settled a long-fought dispute with the creditors committee over the company’s senior management.
A Sept. 25 court filing shows that the BlockFi creditors committee acknowledged that the settlement likely reduced additional administrative fees and expenses that could have cut into the recoveries.
The now bankrupt lending platform blamed FTX’s collapse for its own failure despite the creditor’s committee citing concerns with BlockFi’s relationship with FTX and its former CEO Sam Bankman-Fried.
Related: BlockFi asks court for permission to convert trade-only assets into stablecoins
Estimates show BlockFi owes up to $10 billion to over 100,000 creditors, including $1 billion to its three largest creditors and $220 million to bankrupt crypto hedge fund Three Arrows Capital.
BlockFi is being represented by law firms Kirkland & Ellis LLP and Haynes and Boone LLP.
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