The United States Bankruptcy Court for the District of New Jersey gave its approval for the Disclosure Statement of BlockFi Inc. on August 2, 2023. The statement outlined the company’s plan to maximize recoveries for its creditors during the bankruptcy process.
Mark Renzi, the Chief Restructuring Officer of BlockFi from Berkeley Research Group, expressed confidence in their approach, stating, “We are confident that our Plan provides the best path to expeditiously return crypto back to our clients, and we strongly urge BlockFi’s clients to vote to accept it.”
Conditional Approval and Moving Forward
With the court’s conditional approval of the Disclosure Statement, BlockFi inches closer to achieving its goal of financial recovery. The plan aims to efficiently return crypto assets to its clients, a critical aspect of rebuilding trust and solvency. The company now eagerly awaits the votes of its creditors, who will have the opportunity to accept or reject the proposed plan. Notably, BlockFi’s creditors will receive detailed information about the plan, voting instructions, and other essential documents in a Solicitation Package sent by Kroll, the company’s claims, notice, and solicitation agent.
Voting Process and Deadline
To ensure a valid vote, Kroll must receive it by September 11, 2023, at 4:00 p.m. Eastern Time. The deadline adds a sense of urgency to the process, as every vote counts towards determining the company’s future path. Creditors’ active participation in voting will shape the outcome and the subsequent course of action.
Objections from FTX, 3AC, and the SEC
While BlockFi remains optimistic about the approval of its bankruptcy plan, it faces objections from some prominent entities in the crypto space. FTX, Three Arrows Capital (3AC), and the Securities and Exchange Commission (SEC) have expressed reservations about the proposed plan. Each entity brings its concerns and perspectives to the table, making the decision-making process more intricate.
Clawback Attempts by Three Arrows Capital (3AC)
Three Arrows Capital (3AC), acting as the liquidator, has set its sights on recovering $220 million of “preferential payments” made to BlockFi earlier. The attempt to claw back these funds indicates the complex financial entanglements and legal challenges that often emerge during bankruptcy proceedings. Such attempts aim to redistribute funds to affected parties, further complicating the process for BlockFi.
Recovery Efforts Targeting Other Inoperative Firms
Apart from navigating objections and clawback attempts, BlockFi has its recovery strategy well-defined. If the bankruptcy plan receives approval, the company plans to focus its efforts on recovering money from other inoperative firms like Alameda, FTX, 3AC, Emergent, Marex, and Core Scientific. These efforts signal BlockFi’s commitment to maximizing returns for its creditors and reaffirm its intention to emerge from the bankruptcy stronger and more stable.
In conclusion, BlockFi’s journey through bankruptcy proceedings involves navigating multiple challenges while striving to secure a positive outcome. As the voting deadline approaches, the company awaits the decisions of its creditors, who hold the key to shaping BlockFi’s future. Amidst objections and clawback attempts, BlockFi remains resolute in its mission to recover and return crypto assets to its clients. The outcome of these efforts will not only affect the company’s stakeholders but will also have broader implications for the crypto industry.