BlockFi’s Customer Repayment Plan Receives Court Approval
The court’s decision, made during a hearing on September 26, marks a significant milestone in the company’s winding-down process, potentially allowing customers to recoup a portion of their investments by year-end.
The company’s third amended Chapter 11 plan received the green light from Bankruptcy Judge Michael A. Kaplan, who stated his approval during the hearing. BlockFi’s customer repayment plan, which had the backing of a committee representing customer interests and supportive creditors, paves the way for some BlockFi creditors to receive partial repayment in cryptocurrencies like Bitcoin or Ethereum, as per court documents.
Cryptocurrency Creditors Await Partial Repayments Amid Legal Battles
The expected recovery for unsecured BlockFi creditors ranges from approximately 35% to 63% of their owed amounts, as detailed in an August court filing. The final payout depends on the outcome of BlockFi’s legal battles with FTX and other bankrupt crypto firms. BlockFi has stated that the resolution of disputes with FTX and Three Arrows Capital could significantly impact creditor recoveries, potentially by as much as $1 billion.
A court filing from September 25 noted that the settlement likely reduced additional administrative fees and expenses, thus preserving the overall recoveries for creditors. The committee expressed optimism that BlockFi’s customer repayment plan would begin this year.
BlockFi initially halted customer withdrawals on November 10, just prior to FTX’s bankruptcy. While initially aiming to restructure the business under Chapter 11, BlockFi determined earlier this year that liquidation offered the best avenue for repaying its customers.
