Cryptocurrency platform BlockFi Inc. has been granted a deadline extension by a bankruptcy judge in the state of New Jersey to file it’s Chapter 11 or reorganization plan. The new deadline has been set for mid-May, and BlockFi’s legal counsel has stated that the firm will have a plan prepared for evaluation by unsecured creditors within two weeks. The judge has pointed out that the plan will face “unusual” legal and regulatory difficulties, and he wishes to prevent “wasted dollars and efforts” dealing with various plan applications.
BlockFi filed for bankruptcy in November 2022 following FTX’s colossal debacle, which led to a drop in the crypto market. BlockFi’s initial request for filing its Chapter 11 plan was for a 90-day extension, but due to strong objections faced by its unsecured creditors, the firm submitted a new motion asking for the deadline to be pushed back to May.
BlockFi’s Reorganization Plan to Face Legal and Regulatory Difficulties
The bankruptcy judge has pointed out that BlockFi’s reorganization plan will face “unusual” legal and regulatory difficulties. The firm’s legal counsel has stated that the plan will be prepared for evaluation by unsecured creditors within two weeks. BlockFi’s committee had earlier claimed in its argument that there was no feasible reorganizational plan and that there was no need to keep the firm in bankruptcy. However, the judge has granted the extension, stating that he wishes to prevent “wasted dollars and efforts” dealing with various plan applications.
It is not yet clear what the reorganization plan will entail, but it is expected to address the financial difficulties that BlockFi has been facing since the FTX debacle. The bankruptcy judge has expressed concern over the legal and regulatory hurdles that the plan will face, which may require additional time and resources to overcome. It remains to be seen how BlockFi will address these challenges and whether the reorganization plan will be successful in reviving the firm’s fortunes.
Unsecured Creditors Object to BlockFi’s Reorganization Plan Extension
BlockFi’s unsecured creditors have objected to the firm’s request for an extension to file its reorganization plan. The committee has argued that there is no feasible reorganizational plan and that there is no need to keep the firm in bankruptcy. The committee has also requested an evidentiary hearing to evaluate whether BlockFi has a solid basis to be granted an extension.
However, the bankruptcy judge has dismissed the committee’s request, stating that it is “superfluous” and may lead to weeks of bickering over the extension and other plans. Instead, the judge has granted the extension, stating that he wishes to prevent “wasted dollars and efforts” dealing with various plan applications.
The committee’s objections highlight the challenges that BlockFi faces in its attempts to revive its fortunes. The firm has been struggling since the FTX debacle, and its bankruptcy filing has been viewed as a dire attempt to quash bankruptcy. However, the legal and regulatory hurdles that BlockFi’s reorganization plan will face suggest that the firm’s troubles are far from over.
Conclusion
BlockFi’s bankruptcy filing and subsequent attempts to file a reorganization plan highlight the challenges that the cryptocurrency industry faces. The legal and regulatory hurdles that the firm’s plan will face suggest that the industry is still in its infancy and has a long way to go before it can achieve mainstream acceptance. However, BlockFi’s extension to file its reorganization plan provides hope that the firm can recover from its financial difficulties and emerge as a stronger player in the cryptocurrency market.
