On November 28, BlockFi voluntarily filed petitions for Chapter 11 reorganization. This action follows the dramatic collapse of the crypto exchange FTX and associated corporate entities. The company reveals that it was a difficult but necessary decision they made, and paused most of the activities on their platform. This comes a few weeks after the company claimed it had enough funds to continue operations.
The main aim is to stabilize the business and provide the company with the opportunity to consummate a total restructuring transaction that increases value for all clients and other stakeholders.
As part of its restructuring actions, BlockFi will focus on retrieving all obligations owed to its counterparties, including FTX and associated corporate entities. Due to the recent collapse of FTX and its subsequent bankruptcy process, which remains afoot, the company expects that recoveries from FTX will be deferred.
Mark Renzi, the company’s financial advisor, mentions that with the collapse of FTX, the Blockfi management team and board of directors quickly took action to protect clients and the Company. Mark Renzi also adds that from its inception, BlockFi has operated to positively shape the cryptocurrency industry and extend the sector. BlockFi looks forward to a translucent process that executes the best outcome for all clients and additional stakeholders.
To assure a smooth transition into Chapter 11, BlockFi is filing with the Court a series of customary actions to permit the company to continue to operate its business. These first-day motions have requested to pay employee wages and continue employee benefits without disruption, for which the firm expects to acquire court approval, as well as to establish a Key Employee Retention Plan to secure the company retains trained internal resources for business-critical functions during the chapter 11 process. Blockfi also initiated an internal plan to largely reduce expenses, which also include labor costs.
Platform activity remains paused at this time and has US$256.9 million in cash on hand, which is set to provide sufficient liquidity to back certain operations during the restructuring strategy.
In similarity with these chapter 11 cases, BlockFi International Ltd. a Bermuda-incorporated firm filed a petition with the Supreme Court of Bermuda for the appointment of joint provisional liquidators pursuant to section 161(e) of Bermuda’s Companies Act, 1981 in the immediate term. BlockFi presently anticipates that client affirmations will be addressed through the Chapter 11 process.
In their blog post, the company reveals that additional information about their chapter 11 cases, including court documents and claim details, can be found by visiting the agent Kroll website. Also, clients with questions about the process can call Kroll them or email.
BlockFi also apologizes on the part where communication with their clients has not been as frequent as they expect and they look forward to transparency through our reorganization and will work to maintain clients and stakeholders informed as they make progress. You can refer to more information about the Chapter 11 process and what this signifies in the FAQs.
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