BlockFi Faces Potential Liquidation of Crypto Lending Platform as Over $1B Hangs in Litigation Limbo
In the event of court approval, creditors will be granted until July 28, 2023 to cast their votes on BlockFi's restructuring proposal.
Because Bitcoin
May 15, 2023
Blockworks reported that according to a bankruptcy court document filed on Friday, BlockFi intends to liquidate its crypto lending platform as part of its efforts to repay creditors. The bankrupt crypto lender was granted an extension in late April to develop its bankruptcy plan, which led to the filing of the amended reorganization plan and disclosure statement by the associated debtors on the agreed-upon deadline.
On June 12, 2023, the court will assess the eligibility of creditors with repayment claims to vote on BlockFi's restructuring plan. Those approved by the court will have until July 28, 2023, to cast their vote in favor or against the plan, or to opt out completely. Among the creditors are approximately 100,000 BlockFi customers.
In a letter addressed to creditors, BlockFi's legal team emphasized that the successful outcome of lawsuits against entities they accuse of defrauding them, specifically FTX, Alameda, and Three Arrows Capital, holds the key to asset recovery for their clients.
BlockFi stated in the letter, "The litigation results have the potential to yield exceptionally high recoveries, surpassing 90% for certain claim categories. The overall impact on client recoveries, which could exceed $1 billion, will heavily depend on BlockFi's success in these legal proceedings."
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