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BlockFi, the crypto lender in bankruptcy, has disclosed that the US Bankruptcy Court for the District of New Jersey has conditionally approved its disclosure statement.
This development indicates that BlockFi’s reorganization efforts are steadily advancing eight months after it submitted a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code.
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- In an official announcement on August 2nd, Mark Renzi – BlockFi’s Chief Restructuring Officer, emphasized the lender’s objective to optimize recoveries for its creditors.
- Renzi noted that the conditional approval of its Disclosure Statement brings BlockFi “one step closer to achieving that objective.”
“We are confident that our Plan provides the best path to swiftly return crypto to our clients and we strongly encourage BlockFi’s clients to vote in favor of it.”
- Should the bankruptcy plan receive approval, BlockFi intends to concentrate on retrieving funds from other insolvent entities, such as Alameda, FTX, 3AC, Emergent, Marex, and Core Scientific, in an effort to “maximize recoveries for clients and defend against claims by third parties, which pose a significant risk of diluting clients.”
- Nonetheless, the proposed bankruptcy plans have faced strong opposition from the disgraced crypto exchange FTX, the collapsed hedge fund Three Arrows Capital (3AC), and the Securities and Exchange Commission (SEC).
- The plan offers clients the option for releases if they opt not to withdraw from a voluntary third-party release, which frees them from any claims and causes of action that BlockFi may have against them. This release applies to most clients, except for those who withdrew $250,000 or more from BlockFi Interest Accounts (BIA) or BlockFi Private Client (BPC) Accounts on or after November 2, 2022.
- The voting date for the proposed reorganization is set for September 11.
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