Crypto Lender BlockFi Files for Bankrupty Protection in the US

Finance Magnates

Cryptocoins News / Finance Magnates 33 Views

<p class="MsoNormal text-align-justify"> On Monday, BlockFi, a cryptocurrency lending firm founded in 2017, filed for Chapter 11 bankruptcy protection in New Jersey, United States. </p><p class="MsoNormal">The proceeding also includes eight of the firm’s affiliates, BlockFi said in a statement issued on Monday, adding that its Bermuda subsidiary has also filed a petition before the Supreme Court of Bermuda for the appointment of joint provisional liquidators.</p><blockquote class="twitter-tweet"><p dir="ltr" lang="en">Today, BlockFi filed voluntary cases under Chapter 11 of the U.S. Bankruptcy Code.<a href="https://t.co/adaAx6me4r">https://t.co/adaAx6me4r</a></p>— BlockFi (@BlockFi) <a href="https://twitter.com/BlockFi/status/1597253469374910466?ref_src=twsrc%5Etfw">November 28, 2022</a></blockquote><p class="MsoNormal">A Chapter 11 bankruptcy proceeding under the United States Bankruptcy Code enables a troubled business to reorganize its affairs, debts and assets. Under its filing, the crypto lender noted that it wants to stabilize its business and undergo “a comprehensive restructuring transaction” to give maximum value to its clients and stakeholders.</p><p class="MsoNormal">The bankruptcy filing comes weeks after reports emerged that the crypto lender was <a href="https://www.financemagnates.com/cryptocurrency/blockfi-on-the-brink-of-bankruptcy-another-victim-of-ftx-collapse/">preparing to go bankrupt</a> following the lending firm's <a href="https://www.financemagnates.com/cryptocurrency/blockfi-halts-withdrawals-citing-lack-of-clarity-on-ftx-situation/" target="_blank">suspension of withdrawals</a> on its platform. BlockFi cited a 'lack of clarity' on the situation with crypto exchange FTX which was <a href="https://www.financemagnates.com/cryptocurrency/ftx-the-rise-the-fall-and-the-reaction/" target="_blank">undergoing a liquidity crisis</a> at the time. FTX later <a href="https://www.financemagnates.com/cryptocurrency/troubled-ftx-files-for-bankruptcy-as-ceo-bankman-fried-resigns/">filed for bankruptcy</a> protection in the United States on the same day.</p><p class="MsoNormal">“As part of its restructuring efforts, the Company [BlockFi] will focus on recovering all obligations owed to BlockFi by its counterparties, including FTX and associated corporate entities (‘FTX’). Due to the recent collapse of FTX and its ensuing bankruptcy process, which remains ongoing, the Company expects that recoveries from FTX will be delayed,” BlockFi explained in the statement.</p><p class="MsoNormal">Top Creditors</p><p class="MsoNormal">In its <a href="https://pacer-documents.s3.amazonaws.com/109/1094078/118164199368.pdf">court petition</a>, BlockFi checked the range that says its assets and liabilities stand between $1 and $10 billion. Additionally, the crypto lender indicated that it has over 100,000 creditors. </p><p class="MsoNormal">West Realm Shires Inc., the corporate entity behind FTX.US, is one of its largest creditors to which it owes $275 million in unsecured claims. The creditor is one of the “approximately 130 additional affiliated companies” included in FTX’s ongoing bankruptcy proceedings in the US.</p><p class="MsoNormal">However, the biggest of the 50 largest outsider creditors is Ankura Trust Company, a trust company that specializes in stressed and distressed situations, and to which BlockFi owes $729 million in unsecured claims. On top of that, the company owes the United States Securities and Exchange Commission around $30 million. The remaining 47 creditors were not named in the petition.</p><p class="MsoNormal">Furthermore, BlockFi in the Monday statement noted that it has US$256.9 million in cash on hand. The firm expects that this will “provide sufficient liquidity to support certain operations during the restructuring process.”</p><p class="MsoNormal">Meanwhile, FTX's collapse has been widely attributed to its <a href="https://www.financemagnates.com/cryptocurrency/binance-pulls-out-of-ftx-acquisition-crypto-chaos-ensues/?utm_source=FMnewsletter&utm_medium=email&utm_campaign=10.11.22%2F">misuse of customers’ funds</a> which resulted in <a href="https://www.financemagnates.com/cryptocurrency/ftx-the-rise-the-fall-and-the-reaction/">a liquidity crisis</a> that pushed it into bankruptcy.</p> This article was written by Solomon Oladipupo at www.financemagnates.com.
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