According to BlockFi’s blog post, “[The] Chapter 11 cases will enable BlockFi to stabilize the business and provide BlockFi with the opportunity to consummate a reorganization plan that maximizes value for all stakeholders, including our valued clients.”
BlockFi emerged as the latest victim of FTX’s collapse as the crypto lender and eight of its associate firms filed for bankruptcy.
In June, BlockFi received a $250M loan from FTX in addition to collateralized loans from Alameda Research, FTX’s sister firm.
Earlier this month, BlockFi suspended withdrawals soon after FTX declared bankruptcy.
Now, the crypto lender has filed for Chapter 11 bankruptcy protection in a New Jersey Bankruptcy Court. BlockFi mentioned in its court filing that it owes money to over 100K creditors. BlockFi estimated its liabilities to range between $1B and $10B. The crypto lender also noted that FTX is its second largest creditor.
Mark Renzi, the Managing Director of BRG Corporate Finance, noted,
“With the collapse of FTX, the BlockFi management team and board of directors immediately took action to protect clients and the Company.”
In its press release, BlockFi revealed that currently it has $256.9M in cash which will aid the lender in carrying out “certain operations” during the restructuring procedure. BlockFi seeks to receive Court approval to continue paying employee benefits.
