A US bankruptcy court has conditionally approved BlockFi’s bankruptcy plan. The plan focuses on repaying creditors as quickly as possible and maximizing recovery.
A vote on the plan will take place by the Sept. 11, 2023, deadline.
BlockFi Bankruptcy Plan: Maximizing Recovery
The bankruptcy plan focuses on maximizing recovery for clients and providing distributions as quickly as possible. Mark Renzi of Berkeley Research Group, BlockFi’s Chief Restructuring Officer, said of the plan,
“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.”
The company said that it intended to safely return assets to wallets, as well as non-wallet assets to creditors. Following this, it would wind down the company’s affairs.
It urged all those with the power to vote to do so in the interest of creditors.
Check out our guide on the meltdown FTX implosion: FTX Collapse Explained: How Sam Bankman-Fried’s Empire Fell
Creditors Claim BlockFi CEO Knew About FTX Issues
In another move that will bring some relief to the company, BlockFi has settled with a creditor group over its bankruptcy. The committee of unsecured creditors agreed to back the management settlement after seeing what assets were available to pay potential claims against the lender’s directors and officers.
However, they also strongly disagreed with the conclusions made in the BlockFi investigation. The settlement appeared to be the course of action for making progress.
Other revelations regarding the BlockFi bankruptcy have shaken the crypto community recently. FTX creditors have claimed that BlockFi CEO Zac Prince knew of FTX’s dodgy balance sheet before the exchange collapsed spectacularly last year. They even claimed that Prince asked the risk team to “learn to ‘get comfortable’” with the exposure to FTT.
Meanwhile, the United States Securities and Exchange Commission (SEC) has agreed to let BlockFi pay company investors first. However, FTX, Three Arrows, and SEC have all taken issues with BlockFi’s bankruptcy plans.
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