Bankrupt crypto lender, BlockFi revealed that the US Bankruptcy Court for the District of New Jersey has conditionally approved its disclosure statement.
The development essentially demonstrated that the reorganization process of BlockFi continues to make gradual progress eight months after filing the voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code.
In an official statement on August 2nd, Mark Renzi – BlockFi’s Chief Restructuring Officer, highlighted the lender’s aim to maximize recoveries for its creditors.
Renzi added that the conditional approval of its Disclosure Statement moves BlockFi “one step closer to accomplishing that goal.”
“We are confident that our Plan provides the best path to expeditiously return crypto back to our clients and we strongly urge BlockFi’s clients to vote to accept it.”
If the bankruptcy plan is approved, BlockFi plans to focus on recovering funds from other defunct firms, including Alameda, FTX, 3AC, Emergent, Marex, and Core Scientific, in a bid to “maximize recoveries for clients and defending against claims by third parties, which threaten to massively dilute clients.”
However, the proposed bankruptcy plans have met with strict opposition from the disgraced crypto exchange FTX, fallen hedge fund Three Arrows Capital (3AC), and the Securities and Exchange Commission (SEC).
The plan presents clients with the option for releases if they choose not to withdraw from a voluntary third-party release, which absolves them from any claims and causes of action that BlockFi may have against them. This release is applicable for most clients, with the exception of those who withdrew $250,000 or more from BlockFi Interest Accounts (BIA) or BlockFi Private Client (BPC) Accounts on or after November 2, 2022.
The scheduled date for voting on the proposed reorganization is September 11.
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