BlockFi Can Take Action To Rescue Itself From Bankruptcy

BlockFi, the cryptocurrency lender that declared bankruptcy following the FTX collapse, has been approved by the New Jersey bankruptcy court to auction its crypto mining assets.

BlockFi won bankruptcy court approval to set up an auction for the crypto lender’s digital coin mining business https://t.co/3wtZmjCnGs

— Bloomberg Crypto (@crypto) January 30, 2023

In a statement to the court, the company said it has suitors interested in buying all or part of the company.

The company’s Chapter 11 bankruptcy filing in November revealed that BlockFi’s assets and liabilities ranged between $1 billion and $10 billion, acknowledging that the company owed money to over 100,000 creditors.

In an early January filing citing 35 potential counterparties, BlockFi said it was looking to sell a part or all of its business and had approached 106 potential buyers. BlockFi’s lawyer, Francis Petrie of law firm Kirkland & Ellis, said they had received substantial interest in the market for bidding processes, noting that the sale would be the first in several potential auctions. Citing Petrie

We’ve received substantial interest in the market for certain asset packages, and we expect to receive even more bids going forward. Given the practical realities of the debtors’ circumstances and the current volatility in the cryptocurrency market, we need to act quickly to preserve the value of our assets.

Based on the company’s petition, it will begin receiving purchase bids around February 20 and finalize the sale a week later. For any agreement reached, BlockFi will file the motion of sale before the court by March 1.

After the U.S. government and a committee representing creditors withdrew their objections, Judge Michael Kaplan, who was leading the case, supported that it was a workable and certainly expeditious and efficient process that is contemplated. He added, “We’ll all keep our fingers crossed that it produces significant results.”

BlockFi Was Struggling Long Before the FTX Crisis

According to court documents, BlockFi owes crypto exchange FTX up to $275 million, which makes the beleaguered cryptocurrency firm BlockFi’s second-largest creditor.

$275,000,000 – That’s how much bankrupt crypto lender BlockFi owes on a loan from crypto exchange FTX, its second-largest creditor.

Read The Daily Docket: https://t.co/wnYVwWKv6YSubscribe: https://t.co/dq43WO8CL7 pic.twitter.com/o5a69NTCIo

— Reuters Legal (@ReutersLegal) November 30, 2022

The cryptocurrency lending firm had been struggling long before Sam Bankman-Fried’s crypto empire collapsed. Before its collapse, crypto exchange FTX extended a $400 million line of credit to the lender after the sudden plunge in crypto prices provoked a liquidity crunch for BlockFi.

On Friday, Judge Kaplan approved a $10 million BlockFi bonus pot intended to keep staffers from exiting the company.

Nevertheless, the relationship between BlockFi and FTX remains complicated, with CNBC reporting that the former has up to $1.2 billion worth of assets stuck with FTX and its corporate affiliates. After Sam Bankman-Fried’s crypto conglomerate went belly-up last November, BlockFi was compelled to suspend operations and client withdrawals.

As part of the bankruptcy proceedings, BlockFi requested the courts to allow withdrawals for a select group of customers in December.

BlockFi’s Complex Tussle Over 56 Million Shares

BlockFi has been looking to acquire hundreds of millions of dollars worth of stocks in Robinhood Markets (HOOD). However, the New Jersey court was told that things had taken a different turn following separate legal proceedings in Antigua. Representing BlockFi, Richard Kanowitz of Haynes Boone said:

“On January 27, the court in Antigua granted Sam Bankman-Fried’s motion to stay the liquidation proceedings. They granted leave to appeal, which he must file within 21 days.”

The 56 million shares, valued at around $577 million at current rates, are the subject of a complex tussle involving BlockFi, FTX, Sam Bankman-Fried (SBF), the U.S. Depart of Justice (DOJ), and the Antigua-based liquidators of the shell company that nominally owned the shares.

U.S. Justice Department official, said at FTX bankruptcy court hearing Wednesday that the federal government has seized or is in the process of seizing Robinhood disputed 56 million shares whose ownership is disputed by FTX and BlockFi.https://t.co/SqQedHnzF8

— Laurie L. (@Laurie19871106) January 5, 2023

Based on a court filing earlier in the month, the DOJ has seized the shares as it investigates SBF after he pleaded ‘not guilty’ to charges including wire fraud. The FTX founder and former CEO also said he was willing to give the shares to FTX customers, although he rejected a related bid by FTX to claim ownership.

Related News:

Fight Out (FGHT) – Newest Move to Earn Project

CertiK audited & CoinSniper KYC Verified
Early Stage Presale Live Now
Earn Free Crypto & Meet Fitness Goals
LBank Labs Project
Partnered with Transak, Block Media
Staking Rewards & Bonuses