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The post <a rel="nofollow" href="https://coinpedia.org/news/blockfi-creditors-take-legal-action-push-for-company-liquidation/">BlockFi Creditors Take Legal Action, Push for Company Liquidation</a> appeared first on <a rel="nofollow" href="https://coinpedia.org">Coinpedia Fintech News</a> 
Creditors of crypto lender BlockFi have submitted a petition for the company’s liquidation, alleging misconduct by its management, including CEO Zac Prince. According to the creditors, BlockFi is deliberately delaying the resolution of bankruptcy proceedings to secure legal releases for its senior executives, who are held responsible for loans made to Alameda Research, affiliated with FTX. 
The creditors’ committee, representing BlockFi’s unsecured creditors, filed a document in the New Jersey Bankruptcy Court, expressing their desire to bring the matter to a close. They argue that, unlike other crypto-related cases, the lack of transparency in BlockFi’s situation is enabling unfair practices and extortion tactics. 
<h2 class="wp-block-heading" id="h-creditors-file-petition-for-blockfi-s-liquidation-amid-allegations-of-misconduct">Creditors file petition for BlockFi’s liquidation amid allegations of misconduct</h2> 
The creditors reference an investigative report, previously sealed, which they claim provides detailed evidence of fraudulent behavior by BlockFi, primarily attributed to Zac Prince. They assert that negotiations and mediation efforts have reached an impasse, emphasizing that the case should proceed as a liquidation since the company has no substantial revenue stream. 
The filing further highlights the high administrative costs of $16 million per month, questioning the necessity of paying salaries to numerous individuals seemingly uninvolved in resolving the bankruptcy. 
Concurrently, BlockFi has submitted an updated plan under Chapter 11 of the bankruptcy code, while an amended disclosure statement suggests that holders of BlockFi interest accounts, with a collective debt of around $1 billion, could potentially recover between 39% and 100% of their assets through the bankruptcy plan. In comparison, a liquidation process would yield a recovery range of 36% to 60%. 
BlockFi filed for Chapter 11 bankruptcy protection due to a combination of factors, including the collapse of the cryptocurrency hedge fund Three Arrows Capital, the decline in the price of Bitcoin and other cryptocurrencies leading to decreased collateral value, and the withdrawal of a $240 million credit line from FTX.

BlockFi Creditors Take Legal Action, Push for Company Liquidation

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