Crypto lender BlockFi wins more time to explore possible sale, restructuring

BLOCKFI won a few more weeks to finalise a plan to get out of Chapter 11 bankruptcy, overcoming disgruntled customers who say they should be repaid more quickly.

The cryptocurrency lender 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 on Wednesday (Apr 19). The company intends to file a bankruptcy-exit plan by May 15, Sussberg said.

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 judge Michael Kaplan that BlockFi creditors aren’t sophisticated lenders but individual mom-and-pop retail customers, “many of whom have lost their life savings”.

Stark said BlockFi doesn’t have a viable business to reorganise and will likely sell its platform, which he described as “a bundle of sticks”.

Judge Kaplan denied the committee’s request to take over BlockFi’s case, saying the company is seeking a modest extension to its period of exclusive control.

BlockFi is moving as quickly as possible and working to return money to customers, “but we’re going to do it in a thoughtful manner, and not a chaotic manner”, Sussberg said.