BlockFi's reorganization process is making steady progress, as the US Bankruptcy Court of New Jersey has given conditional approval to the company's disclosure statement. This move comes after BlockFi and the Official Committee of Unsecured Creditors issued a joint statement on A august 2, urging eligible parties to vote in favor of the plan before the voting deadline of September 11. The successful approval of the plan is expected to resolve the Chapter 11 cases and facilitate the return of client funds.
Once the bankruptcy plan receives approval, BlockFi plans to focus on recovering funds from several failed companies, including Alameda Research, FTX, Three Arrows Capital, Emergent, and Core Scientific. The primary goal is to optimize the recovery for clients while addressing p potential third- party claims that could dilute client assets significantly. The plan offers clients the option to opt for voluntary third-party releases, which would shield them from any claims or lawsuits that BlockFi might have against them. This release is applicable to most cli ents, excluding those who withdraw $250,000 or more from a BlockFi Interest Account (BIA) or BlockFi Private Client (BPC) account after November 2, 2022.
Furthermore, the plan outlines that BlockFi will not seek recovery for amounts under $250,000 that customers correctly transferred from BIA or BPC to their Wallet and withdraw prior to the platform suspension on November 10, 2022. Clients with claims under $3,000, as well as selected clients whose claims are reduced to $3,000, will be categorized as Facilitated Claims and will receive a one-time cash distribution equivalent to 50% of their claim from BlockFi's assets.
In June, the US Securities and Exchange Commission (SEC) agreed to postpone the collection of a $30 million fine imposed on the bankrupt cryptocurrency lending platform until creditors are fully repaid. This payment constitutes the remaining balance of a $50 million settlement repayment ached with regulators in February 2022.
