In a press release published today, BlockFi stated that the bankruptcy filing is under the context of “restructuring” while they proceed with the legal complaints of the funds that are found to be compromised by the FTX debacle. Meanwhile, they have requested that the company remain operational while the restructuring process continues, protected under Chapter 11.
Thank you for reading this post, don’t forget to subscribe!
In the press release, BlockFi clarified that it has close to 256 million in available liquid assets, which will be used for this restructuring process. The company awaits the capital injection to comply with all the legal obligations it has with its creditors. The funds will be used, within the restructuring, for the payment of employee salaries.
The company did not clarify what will happen to its clients’ funds, taking into account that, since November 11, the platform disabled withdrawals, as reported by CriptoNoticias. In its chapter 11 protection filing document, BlockFi notes that it has more than 100,000 creditors.
FTX and BlockFi had a pretty close relationship. In June of this year, BlockFi went through a financial crisis, receiving a financial lifeline with a credit line for USD 400 million, from FTX US. This made FTX the main creditor of the loan company, for liabilities of around USD 275 million. The Securities and Exchange Commission (SEC) is also listed among the company’s creditors, with a debt of USD 30 million.
As FTX was the one that injected capital into BlockFi, after its fall, the company found itself in a very difficult situation, which is why it ended up declaring bankruptcy. The Wall Street Journal had already advanced this possibility on November 15.
Chapter 11 of the United States Bankruptcy Law allows companies to declare bankruptcy, as a measure of protection against creditors. However, the assets of the bankrupt company pass into the hands of an assigned court, who will be in charge of their administration. Because of this, it could be a long process before platform users see their funds again.
courtesy of: https://www.criptonoticias.com
BlockFi, the lending platform founded in 2017, filed for bankruptcy along with 8 of its subsidiaries, this Monday, November 28. He did so by applying for the protection of Chapter 11 of the United States Bankruptcy Law.