- BlockFi is pressing ahead with self-liquidation after failing to attract a buyer
- The company has been in bankruptcy since November and is now taking steps to dissolve itself
- BlockFi owes over $1 billion to creditors
Failed crypto platform BlockFi has decided to enter voluntary liquidation after coming to the conclusion that a sale is unlikely. The company has been in bankruptcy since November and had hoped to arrange a sale, but six months later its operators have come to the realization that this is almost certainly not going to happen, and so has started liquidation proceedings. The company has already auctioned off its mining assets but found out last week that it owes a portion of its user base $300 million following its collapse.
Over $1 Billion Owed to Creditors
BlockFi submitted the proposal to the court last week and posted a tweet thread on the matter, urging creditors to accept it:
Earlier today, we filed our disclosure statement with the Court. This is an important step forward in our chapter 11 cases toward our goal of maximizing recoveries for our clients: https://t.co/6lnZmLOwG8
— BlockFi (@BlockFi) May 13, 2023
In the court filing, BlockFi outlines a comprehensive strategy detailing the treatment of various claim holders, including secured tax claims, account holder claims, general unsecured claims, and others. This includes 660,000 client accounts, with the top 50 creditors owed $1.3 billion, although BlockFi believes that certain classes of claims could potentially see recoveries “as high as 100%.” However, this confidence stems in large part from the $648 million lawsuit that BlockFi has filed against an investment vehicle owned by FTX founder Sam Bankman-Fried, which is far from certain.
Bankruptcy Court Needs to Approve Liquidation
Blockfi’s intention to proceed with a self-liquidating transaction is still subject to full approval from the bankruptcy court, with the company acknowledging that any successful execution hinges on the involvement of specific high ranking employees. The filing indicates that the possibility of an alternative solution, such as a sale of the company, is not entirely ruled out, although with no interest yet taken past the initial stage this is looking increasingly unlikely.
Creditors will now be asked to vote on the plan, although the bankruptcy court could still veto it is if doesn’t act in their best interests.