BlockFi, the prominent cryptocurrency lender, has taken a significant step forward in its reorganization efforts as the United States bankruptcy court in New Jersey provisionally approved the company’s disclosure statement.
In a joint statement released on August 2, 2023, BlockFi and the Official Committee of Unsecured Creditors called upon all eligible parties to vote in favor of the proposed Plan. The voting date has been set for September 11, 2023. Should the Plan receive approval, the Chapter 11 cases would be concluded, and the clients’ funds would be returned, relieving those affected.
The lender’s future endeavors are also noteworthy, as it intends to focus on retrieving funds from other failed businesses, including Alameda, FTX, 3AC, Emergent, Marex, and Core Scientific. The ultimate goal is to maximize the recovery for clients while safeguarding their assets against potential third-party claims that could have severe implications.
BlockFi revealed that it will waive all rights and causes of action it may have against its customers. However, this waiver is conditional and applies only if those clients choose not to opt out of a voluntary third-party release offered through the Plan.
Customers who have withdrawn $250,000 or more from their BlockFi Interest Account (BIA) or BlockFi Private Client Account (BPC) on or after November 2, 2022, will be exempt from the distribution.
On the other hand, clients who moved less than $250,000 from their BIA or BPC to their Wallet or withdrew less than $250,000 from their Wallet before the Platform Pause on November 10, 2022, will not have to return any of those funds.
For smaller claims, a one-time cash payout will be made by the BlockFi Estate. Clients with claims below $3,000 or those who voluntarily reduce their claims to $3,000 will be eligible to receive these cash payments. In this category, creditors can anticipate receiving 50% of their claims in cash.
This latest development sets BlockFi on a clear path toward resolution and financial recovery. The approval of the Plan would provide much-needed reassurance to clients who have been anxiously awaiting the return of their funds. By addressing potential legal hurdles proactively, BlockFi aims to protect its clients’ interests while laying the groundwork for a stronger future.
The journey to reorganization has been arduous, but with the acceptance of the disclosure statement and the proposed Plan, there is hope that the worst may be behind BlockFi. As the voting date approaches, all eyes will be on the outcome, which will undoubtedly have significant implications for the company and its stakeholders.
