Bankrupt crypto lending platform BlockFi has received approval to commence the repayment process for its customers as part of a liquidation plan.
This approval follows the company’s conditional authorization to reimburse customers before proceeding with the company’s winding-down process.
Uncertain Factors Surround Bankrupt Crypto Lender BlockFi’s Plan
According to a recent court filing, the United States Bankruptcy Court of New Jersey has approved crypto lender BlockFi’s third amended Chapter 11 bankruptcy plan.
It also highlights that BlockFi’s chief restructuring officer, Mark Renzi, has declared his support for the amended plan. Meanwhile, the FTX Debtors previous objection with the plan has reportedly been resolved.
However, it outlines that the United States Securities and Exchange Commission (SEC) “limited objection” to the plan has only been partially resolved.
Meanwhile, the resolution of the filing of technical modifications to the amended plan is still pending.
The filing states that the next action in the plan involves the debtors submitting a consolidated list of the top 50 unsecured creditors and a consolidated list of all creditors.
A recent report indicates that unsecured creditors of BlockFi could potentially receive a payout ranging from 35% to 63% of their owed amounts. Additionally, certain creditors are set to receive partial payments in the form of Bitcoin or Ethereum.
BlockFi has attributed the liquidity crisis that ultimately led to its bankruptcy to the now-defunct crypto exchange FTX.
Recently, creditors of FTX have alleged that BlockFi CEO Zac Prince was already aware of FTX’s financial troubles prior to its November 2022 collapse.
In a previous filing Renzi noted the importance of maximizing recovery for clients in the proceedings:
“BlockFi’s mission through this process has been to maximize recoveries for our creditors, and conditional approval of our Disclosure Statement moves us one step closer to accomplishing that goal. We are confident that our Plan provides the best path to expeditiously return crypto to our clients and we strongly urge BlockFi’s clients to vote to accept it.”
This is a developing story and more information will be added as it becomes available.
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