Read

<p class="is-style-lead">A U.S. bankruptcy court recently ordered cryptocurrency lender BlockFi to withdraw its prematurely disclosed chapter 11 reorganization plan and accompanying statement until all materials are formally authorized.</p>



<p>On May 18, the court directed <a href="https://crypto.news/blockfi-opts-to-liquidate-its-lending-business/" data-type="URL" data-id="https://crypto.news/blockfi-opts-to-liquidate-its-lending-business/">BlockFi</a>, the insolvent cryptocurrency lender, to retract its prematurely disclosed chapter 11 reorganization plan and corresponding statement. </p>



<p>The court insisted these documents should not have been revealed before being officially sanctioned. </p>



<p>As a remedial measure, BlockFi was instructed to issue a rectification statement on its <a href="https://twitter.com/BlockFi/status/1659619173603917831?s=20" data-type="URL" data-id="https://twitter.com/BlockFi/status/1659619173603917831?s=20" target="_blank" rel="noreferrer noopener">Twitter account</a> within a day, which it promptly followed.</p>



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true"><p lang="en" dir="ltr">A Corrective Letter to Creditors can be found here: <a href="https://t.co/ijhsCn6vDt" target="_blank">https://t.co/ijhsCn6vDt</a></p>&mdash; BlockFi (@BlockFi) <a href="https://twitter.com/BlockFi/status/1659619173603917831?ref_src=twsrc%5Etfw" target="_blank" rel="noopener">May 19, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<p>The rectification tweet urged creditors to ignore the premature announcements on the court docket, its official website, and Twitter feed from May 13, regarding the reorganization plan until official authorization was provided.</p>



<p>In response, the Official Committee of Unsecured Creditors, a representative group of BlockFi&#8217;s creditors, filed a stern reproach in court on May 15, criticizing BlockFi&#8217;s noncompliance with the law and chapter 11 regulations. </p>



<p>The committee accused the company of undermining the integrity of the <a href="https://crypto.news/blockfi-declares-bankruptcy-as-ftx-wildfire-spreads/" data-type="URL" data-id="https://crypto.news/blockfi-declares-bankruptcy-as-ftx-wildfire-spreads/">bankruptcy process</a>.</p>



<div class="cn-block-related-link">

    <svg class="cn-block-related-link__icon icon" aria-hidden="true">
        <use xlink:href="#icon-bookmark"></use>
    </svg>

    
        <span class="cn-block-related-link__prefix">
            You might also like:
        </span>

    
    
        <a href="https://crypto.news/blockfi-to-file-its-assets-and-liability-for-bankruptcy-case/" class="cn-block-related-link__link">
            BlockFi to file its assets and liability for bankruptcy case        </a>

    
</div>


<p>According to the committee, BlockFi sent unsolicited emails to each of its nearly 100,000 creditors, even those with legal counsel, breaching their non-consent for direct email correspondence on legal issues.</p>



<p>Adding to the list of improprieties, the committee highlighted a letter to creditors dated May 12. </p>



<p>Despite BlockFi&#8217;s assertion that the letter was not intended to solicit votes for its chapter 11 plan, the committee felt parts of the letter were conspicuous and exceeded the scope of a simple bankruptcy development update.</p>



<p>BlockFi stated in one part of the letter that the proposed plan would expedite the process of returning funds held in <a href="https://crypto.news/blockfi-customers-want-to-take-over-375m-worth-of-crypto-assets/" data-type="URL" data-id="https://crypto.news/blockfi-customers-want-to-take-over-375m-worth-of-crypto-assets/">wallet accounts</a> to customers.</p>



<figure class="wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio"><div class="wp-block-embed__wrapper">
<iframe loading="lazy" title="BlockFi UPDATE - The Disclosure Statement Is Released! Voting &amp; Getting Funds Back!" width="1020" height="574" src="https://www.youtube.com/embed/FG8EcIMSCTg?feature=oembed" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen></iframe>
</div></figure>



<p>Blockworks had earlier reported that the same letter suggested the potential for asset recovery for BlockFi&#8217;s clients was contingent on pending legal cases against firms, including <a href="https://crypto.news/bankruptcy-court-told-ftx-and-alameda-they-owe-blockfi-1b/" data-type="URL" data-id="https://crypto.news/bankruptcy-court-told-ftx-and-alameda-they-owe-blockfi-1b/">FTX, Alameda</a>, and <a href="https://crypto.news/three-arrows-capital-assets-crypto-markets-bloodbath/" data-type="URL" data-id="https://crypto.news/three-arrows-capital-assets-crypto-markets-bloodbath/">Three Arrows Capital</a>, who allegedly defrauded BlockFi. </p>



<p>BlockFi noted the possibility of recovery sums exceeding $1 billion, depending on the lawsuit outcomes. The reorganization plan&#8217;s approval deadline for creditors is set for July 28, 2023, pending court approval.</p>



<div class="cn-block-related-link">

    <svg class="cn-block-related-link__icon icon" aria-hidden="true">
        <use xlink:href="#icon-bookmark"></use>
    </svg>

    
        <span class="cn-block-related-link__prefix">
            Read more:
        </span>

    
    
        <a href="https://crypto.news/blockfi-opts-to-liquidate-its-lending-business/" class="cn-block-related-link__link">
            BlockFi opts to liquidate its lending business        </a>

    
</div>

Court directs BlockFi to retract chapter 11 reorganization plan

crypto.news

Other articles published on May 22, 2023

Xenna Ver. 0.7.1 Patch Notes — Epic HADES Base Tournament finals! +++ Xenna on Google Play Store!

Hidden crypto holdings turn divorce battles into high-stakes cases, attorneys warn

3 Must Have Altcoins For A Bullish 2023

President Biden sets sights on crypto amidst US debt crisis

DAO Proposal: ChainGPT ($CGPT) Community Burn Event

Game Staking Service is Now Open

Join our free newsletter for daily crypto updates!