BlockFi’s Restructuring Plan Slammed by US Court

• US Bankruptcy Court orders crypto lender BlockFi to withdraw its restructuring plan.
• Judge Michael B. Kaplan found the firm’s plan was unauthorized and premature.
• Creditors blamed the company’s poor management for its downfall.

BlockFi’s Restructuring Plan Slammed by US Court

Bankrupt crypto lender BlockFi has been ordered by a US bankruptcy court to withdraw its restructuring plan, deeming it as premature and unauthorized. New Jersey Bankruptcy Court Judge Michael B. Kaplan issued an emergency order clarifying that the initial plan was prematurely posted without court approval and prohibiting BlockFi from issuing any further statements about their plan. The creditors have been at odds with BlockFi since it filed for bankruptcy in November, blaming the company’s poor management and subsequent restructuring plans for its downfall.

Court Order Blocks Restructuring Plan

The court order requires BlockFi to issue a corrective letter, stop soliciting support, update their website and social media with a disclaimer, and notify all their creditors with an email. Following the court ruling, BlockFi has posted an updated corrective letter on their official Twitter account with the required statements.

Creditors Speak Out

The unapproved restructuring plan has further stoked tensions between creditors of BlockFi and the firm itself who hoped for a swift end to this saga after filing for bankruptcy in November of last year. On May 17th, The Official Committee of Unsecured Creditors claimed that the plan released BlockFi’s management of any legal responsibility for the crash which prompted harsh criticism from those affected by this decision.

FTX Claims Largest Driver

The original wind-down proposal highlighted around $1 billion in claims against commercial counterparts such as FTX and Alameda – two crypto exchanges owned by FTX – which were said to be “the largest driver” in reimbursing creditors according to Kroll Restructuring Administration (KRA).

Conclusion

It remains unclear when or if creditors will receive financial compensation or what measures are being taken to rectify this situation as investigations into these matters continue but one thing is certain; this case is far from over yet with many twists still sure to come before it reaches a resolution satisfactory to all parties involved