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Administrator of Bankrupt Crypto Scheme BlockFi Submits Plan in Court to Make Customers Whole!

Collapsed crypto lender celsius initiaties Chapter 11 proceedings
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The administrator of the bankrupt U.S. crypto lender BlockFi has submitted a comprehensive plan to the U.S. Bankruptcy Court for the District of New Jersey, seeking approval for a final distribution aimed at making customers and unsecured creditors whole. This move marks a significant step towards concluding the wind-down process that began after BlockFi filed for Chapter 11 bankruptcy in November 2022.

Significant Transaction Completed

The administrator’s report highlighted the closure of a major transaction that will enable the near-term distribution of 100% for all eligible claims. Specifically, the administrator successfully monetized $874.5 million in claims against the bankrupt crypto exchange FTX at a premium to their face value, significantly boosting the resources available for distribution.

A Remarkable Recovery

“This transaction marks a final chapter in the wind-down and is the best possible outcome for customers of BlockFi,” stated Mohsin Y. Meghji, Plan Administrator of BlockFi and Managing Partner of M3 Partners. Meghji emphasized the exceptional nature of the recovery, noting, “These recoveries on customer claims, and the timeline those recoveries will be distributed on, were unimaginable when these cases were filed in November 2022. These results, achieved through tireless efforts by various parties, are remarkable.

Interim Distributions Through Coinbase

In a related announcement last week, BlockFi disclosed that it would commence the first interim crypto distributions through Coinbase in July 2024. This initial distribution is part of the broader plan to ensure that all eligible claims are met in full, setting the stage for the final distribution.

The administrator has asked the court for an order to proceed with the final distribution, aiming to expedite the process and deliver recoveries to customers and creditors as swiftly as possible. Meghji concluded, “We intend to commence the Final Customer Distribution as quickly as reasonably practicable.”

Background on BlockFi’s Bankruptcy

BlockFi‘s troubles began in early November 2022 following the collapse of the crypto exchange FTX. The contagion effect from FTX‘s downfall severely impacted BlockFi, leading to the halt of withdrawals and eventually filing for Chapter 11 bankruptcy protection on November 28, 2022. Since then, BlockFi has been engaged in a complex process of court-approved customer withdrawals and asset recovery.

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