BlockFi completes bankruptcy preparations

The lending platform BlockFi has completed bankruptcy preparations and is ready to begin distributing funds to creditors.

BlockFi is pleased to announce that its bankruptcy plan (the “Plan”) is effective and the company has emerged from bankruptcy as of October 24, 2023 (the “Effective Date”).

— BlockFi (@BlockFi) October 24, 2023

The first distribution is planned for early 2024.

Withdrawal is now available to almost all custodial-account clients.

Users with interest-bearing accounts and loans will receive electronic notices inviting them to withdraw any available funds in the coming months. The process will begin once obligations to the first category of creditors have been settled.

The total amount of compensation depends on the outcome of proceedings with the insolvent FTX, hedge fund Three Arrows Capital and other companies. The total claims against them reach $1 billion.

In September BlockFi received court approval to carry out the plan to close the business. Clients may expect to recover 35–63% of the debt.

According to documents, some recipients expect to receive payments in Bitcoin and Ethereum.

In November 2022, the firm filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code. This followed roughly two weeks after the collapse of FTX and Alameda Research. Previously, BlockFi acknowledged that the exchange and its subsidiary had outstanding obligations to the company.

Earlier, a court allowed the platform to return $300 million to custodial-account users.