The Self-Liquidation Plan of Blockfi Crypto Lender
Blockfi, the crypto lender that has recently filed for bankruptcy, has decided to proceed with a self-liquidation transaction after failing to sell its business. The company’s top 50 creditors are owed $1.3 billion, but certain classes of claims could see recoveries as high as 100%. The biggest hopes for recovery lie in obtaining assets owed by Alameda Research and FTX, two entities that Blockfi has claims against. The company’s plan to proceed with a self-liquidating transaction is not yet set in stone, as it requires full approval from the bankruptcy court, as well as certain crucial employees to consummate the plan. Meanwhile, a sale of the company is not completely off the table, as an alternative transaction is possible.
The Details of the Plan
The self-liquidation transaction of Blockfi would involve distributing its assets to creditors in accordance with the terms of the plan, followed by a wind-down of its affairs. The plan published in the court filing outlines how various claim holders, including secured tax claims, account holder claims, general unsecured claims, and others, will be treated, while also mentioning the cancellation of Blockfi’s existing equity interests.
Blockfi has emphasized the importance of its employees in the company’s self-liquidation plan. It stated that the Blockfi platform was developed in-house, is written in a unique and esoteric programming language that outsiders would have a difficult time understanding. Without the necessary staff, the company does not believe that the plan is feasible.
The Future of Blockfi
The self-liquidation plan might be Blockfi’s best option to ensure that its creditors are paid. Blockfi has made it clear in its latest disclosure statement with the bankruptcy court that selling the company would not benefit its creditors. The company wants to take matters into its own hands and ensure that its creditors get their fair share of the company’s assets. The success of the plan hinges on the approval of the bankruptcy court, as well as the necessary employees to execute the plan.