BlockFi's Creditor Group Approves Restructuring, Payouts Awaited

In a significant development, BlockFi's restructuring plan has received approval from both the company's management and the creditor committee. This news was conveyed to users through an email communication on September 30th, marking a crucial step in the ongoing process of BlockFi's recovery. In the email, BlockFi shared the following statement: "[We are] pleased to announce that on Tuesday, September 26, 2023, our Chapter 11 Plan ... was confirmed. Through the voting process ... we received overwhelming support for the Plan with over 90% approval in amount across all voting classes." The approval of this plan is seen as a pivotal moment for BlockFi as it paves the way for the recovery of assets owed to the company by entities such as FTX and Three Arrows Capital (3AC). However, this aspect of the restructuring is not without its challenges, as both FTX and 3AC have recently contested BlockFi's recovery plans. Some objecting parties even intend to pursue claims against BlockFi. Additionally, BlockFi highlighted that the finalized plan will enable the distribution of cryptocurrency to users affected by the company's financial troubles. This development is crucial for users who have been patiently waiting for access to their funds. Furthermore, the plan's approval ensures that BlockFi can continue its claims process, ensuring that users receive their rightful amount of funds. The approval of the plan also signifies that BlockFi is on track to exit bankruptcy proceedings and conclude its winding-down process. The effectiveness of the plan, along with recognition by foreign courts, will be key milestones in this journey. BlockFi had faced significant challenges leading up to this point. It halted withdrawals and filed for bankruptcy in November 2022, amid reports that it owed a substantial debt, estimated to be between $1 billion and $10 billion, to over 100,000 creditors. With this latest development, a new group of BlockFi users will soon be able to initiate the process of claiming compensation, providing a glimmer of hope after the company's collapse. BlockFi has assured its customers who hold funds in BlockFi Interest Accounts (BIAs) or Retail Loans that they will receive emails with withdrawal instructions in the coming months, although an exact start date was not provided. The company has also mentioned the possibility of subsequent distributions, with amounts contingent on the outcome of FTX's bankruptcy case. Furthermore, BlockFi has been actively processing withdrawals for users of the BlockFi Wallet since August 17, urging users to submit their requests promptly to access their crypto funds while the withdrawal period remains open. BlockFi's restructuring plan approval marks a significant step toward resolving the company's financial issues and facilitating the long-awaited payouts for affected users. As the process unfolds, many are watching with anticipation for further developments in this complex and evolving situation.