BlockFi’s restructuring plan has been approved by the company’s management and creditor committee, according to an email sent to users on Sept. 30.
In that email, BlockFi wrote:
“[We are] pleased to announce that on Tuesday, September 26, 2023 our Chapter 11 Plan … was confirmed. Through the voting process … we received overwhelming support for the Plan with over 90% approval in amount across all voting classes.”
The company went on to state that it “worked diligently” with members of the Unsecured Creditors’ Committee (UCC) to reach the agreement.
BlockFi said that the plan will allow it to recover assets that FTX, Three Arrows Capital (3AC), and other parties owe to it. This part of the restructuring process is complicated by the fact that both FTX and 3AC have recently contested BlockFi’s recovery plans. Some of the objecting parties apparently intend to pursue claims against BlockFi as well.
BlockFi additionally said that the finalized plan will allow it to continue distributing cryptocurrency back to affected users. The plan’s approval will also allow it to continue its claims process, ensuring that users receive the proper amount of funds.
The plan’s approval also means that BlockFi will soon be able to exit bankruptcy and wind down. This will occur when the plan becomes effective and when foreign courts recognize that the plan has been approved by the U.S. bankruptcy court.
BlockFi halted withdrawals and filed for bankruptcy in November 2022. Reports at the time said that the firm owed $1 billion to $10 billion to over 100,000 creditors.
More users will soon access withdrawals
The latest development means that another group of BlockFi users will be able to claim compensation for the first time since the company’s collapse.
BlockFi said that customers who hold funds in a BlockFi Interest Account (BIA) or Retail Loans will soon receive emails with instructions on withdrawals. The firm said that this process will begin in the coming months but did not provide any exact start date.
The company added that, following the first group of distributions, there likely will be later distributions with amounts determined by the outcome of FTX’s bankruptcy case.
BlockFi also noted that BlockFi Wallet withdrawals are currently in process. It urged users to submit a request to receive their crypto funds while the withdrawal period remains open. The company opened withdrawals for wallet users on Aug. 17.
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