BlockFi, a lender of digital assets, was given additional time to submit a bankruptcy exit plan by a New Jersey bankruptcy judge in the United States on April 19.
The cryptocurrency lender filed for bankruptcy in November 2022 and has been reportedly granted a 48-day extension until May 15 to file an exit plan. The crypto firm is exploring a potential sale of company assets or the possibility of getting an outside backer to support a restructuring deal, BlockFi lawyer Joshua Sussberg said in a hearing Wednesday.
According to the bankruptcy code, debtors are expected to propose a Chapter 11 plan within the first 120 days of filing. Thus, BlockFi was required to present a plan by March 27. However, on March 21, the company filed a request to prolong the deadline for its Chapter 11 plan by 90 days to June 26.
BlockFi’s lawyers said in defense of the request to prolong the deadline, ‘much work remains’ due to the scale and complexity of the Chapter 11 cases. The company is estimated to owe up to $10 billion to over 100,000 creditors. Judge Michael Kaplan, the bankruptcy judge handling the case reportedly deemed it worthwhile to extend the deadline to ensure the smooth continuation of the case.
A committee of BlockFi customers argued they should be allowed to take control of the bankruptcy case so cryptocurrency held on the platform can be returned to creditors immediately. Committee lawyer Robert Stark told Kaplan that BlockFi creditors aren’t sophisticated lenders but individual mom-and-pop retail customers, ‘many of whom have lost their life savings.’ according to reports.
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Stark claimed that BlockFi lacks a workable business for reorganization and is likely to sell its platform, which he referred to as a ‘bundle of sticks.’ Although Kaplan rejected the committee’s appeal, he chose to grant a deadline extension shorter than the one requested by BlockFi.
According to Sussberg, the length of the extension was “modest,” and he stated that the company would have a plan ready for unsecured creditors to evaluate within two weeks.
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