The US Bankruptcy Court in New Jersey has given the green light to BlockFi's liquidation plan, bringing customers of the bankrupt cryptocurrency lending platform closer to receiving compensation. Bankruptcy Judge Michael A. Kaplan approved BlockFi's third amended Chapter 11 plan during a court hearing on September 26 .
The repayment amount for BlockFi's unsecured creditors will largely depend on the outcomes of the platform's ongoing legal battles with FTX and other bankrupt cryptocurrency companies. Court documents reveal that BlockFi initially submitted its liquidation plan on November 28 but was subsequently required to revise and resubmit it on multiple occasions.
The approval of BlockFi's liquidation plan followed the resolution of a longstanding dispute between the company and a committee of creditors regarding senior management. In a court filing on September 25, the committee of creditors recognized that the settlement could lead to reduced administrative fees and expenses, potentially increasing the recovery amount for creditors.
BlockFi, which is currently bankrupt, has attributed FTX's collapse to its own shortcomings, despite concerns raised by a committee of creditors regarding BlockFi's relationship with FTX and its former CEO, Sam Bankman-Fried. BlockFi owes an estimated amount of up to $10 billion to over 100,000 creditors, including $1 billion to its three largest creditors and $220 million to the bankrupt cryptocurrency hedge fund Three Arrows Capital.
Legal representation for BlockFi includes Kirkland & Ellis LLP and Haynes and Boone LLP.
