BlockFi’s Restructuring Plan Rescheduled To May 15

Key Points:

• The deadline for BlockFi to submit its Chapter 11 or reorganization plan has been pushed out to mid-May.
• The judge noted that it was worth the small wait to ensure that the case proceeded well.
• In its prior argument, the committee asserted that there was no practicable reorganizational plan.

BlockFi was granted a few additional weeks to execute a plan to exit Chapter 11 bankruptcy, overcoming irate customers who said they should be refunded sooner, Bloomberg first reported.

A bankruptcy court in the state of New Jersey extended the deadline for cryptocurrency platform BlockFi to submit its Chapter 11 or reorganization plan to the middle of the next month on Wednesday. The court remarked that it was worth a slight delay to ensure that the case would go smoothly.

After FTX’s massive fiasco, which resulted in horrible carnage in the crypto market, BlockFi declared bankruptcy in November of last year. BlockFi’s first request for a 90-day extension to file its Chapter 11 plan was for a 90-day extension, but owing to significant opposition from its unsecured creditors, the once-famous crypto trading platform filed a fresh petition asking for the date to be pushed back to May.

BlockFi lawyer Joshua Sussberg said at a hearing Wednesday that the bitcoin lender is looking into selling firm assets or finding an outside sponsor to support a restructuring arrangement. Sussberg said that the corporation wants to submit a bankruptcy-exit plan by May 15.

According to Law360’s coverage of the order, U.S. Bankruptcy Judge Michael B. Kaplan indicated that the plan would face unique legal and regulatory challenges and that he sought to avoid wasted dollars and efforts dealing with numerous plan applications.

A committee of BlockFi users urged that they should be given control of the bankruptcy case so that bitcoin stored on the platform may be repaid to creditors as soon as possible.

According to Committee lawyer Robert Stark, BlockFi creditors are not sophisticated lenders but rather average mom-and-pop retail consumers, “many of whom have lost their life savings.”

In its prior argument, the committee said that there was no viable restructuring plan and that there was no reason to maintain the corporation in bankruptcy. At the meeting, the committee said that an evidentiary hearing was required to determine if BlockFi had a good basis to be granted an extension. In response, Judge Kaplan said that it was unnecessary and might lead to weeks of wrangling over the extension and other preparations.

Judge Kaplan refused the committee’s request to take over BlockFi’s lawsuit, stating that the corporation is just seeking a little extension of its exclusive control term.

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Harold

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