BlockFi wins court approval to implement liquidation plan

BlockFi, the crypto-lending platform in bankruptcy proceedings, has received court approval to implement plan to wind down the business. Clients can expect to recover 35–63% of their outstanding debt.

Total claims against them amount to roughly $1 billion.

According to the documents, some recipients expect to receive payouts in Bitcoin and Ethereum. The process could be launched by the end of 2023.

The committee representing clients and creditors backed the plan proposed by management.

It was approved after BlockFi settled a dispute concerning potential legal claims against the company’s leadership. Creditors accused top management of ignoring warning signs before extending the loan to FTX.

According to the committee, despite a number of issues that arose during the consideration, BlockFi is now prepared to repay clients’ debt faster than other crypto firms undergoing reorganisation.

In November 2022, the firm filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. This occurred roughly two weeks after the collapse of FTX and Alameda Research. Earlier, BlockFi acknowledged that the exchange and its subsidiary had outstanding obligations to the company allowed BlockFi to return $300 million to custodial-account holders.