BlockFi announced on Nov. 28 that it had filed for Chapter 11 bankruptcy. TheĀ filingĀ in the United States Bankruptcy Court for the District of New Jersey pertains to the company and its eight subsidiaries. The move comes after several days of speculation on the companyās financial health after the collapse of FTX.
According to aĀ statement, BlockFi has $256.9 million on hand. It has filed motions āto pay employee wages and continue employee benefits without disruption.ā It also seeks to āestablish a Key Employee Retention Plan to ensure the company retains trained internal resources for business-critical functionsā and has created an internal plan to reduce expenses.
BlockFi International has also filed for bankruptcy with the Supreme Court of Bermuda, according to the statement.
FTX USĀ received a $400-million credit lineĀ at the end of June, leading to worries after the FTX collapse that BlockFiās exposure would cause it to experience a liquidity crisis. BlockFi halted withdrawals on Nov. 11. In an update on its website, the companyĀ writes:
āSince the pause, our team has explored every strategic option and alternative available to us, and has remained laser-focused on our primary objective of doing the best we can for our clients. These 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.ā
The company alsoĀ tweeted, āAs part of our restructuring efforts, we will focus on recovering all obligations owed to BlockFi by counterparties, including FTX.ā
In the list of top 50 creditors filed in the court documents, unsecured claims range from $275 million to West Realm Shires Inc. (FTX US) to $999,650 to an unidentified creditor. It shows a debt of $30 million to the U.S. Securities and Exchange Commission.
BlockFiĀ reached a settlement with the SECĀ for $100 million in February for failing to register accounts the SEC deemed securities.Ā West Realm Shires and the SEC were listed by name in the document, as was Ankura Trust, which provides corporate trust services "in distressed situations." That organization is owed $729,036,246. An unnamed creditor is third on the list, above the SEC, owedĀ $48,561,400.
BlockFi states in the filing that it has over 100,000 creditors, assets between $1 billion and $10 billion, and liabilities in the same range. In addition, Valar Ventures is listed as the owner of 19% of the shares in the company.
BlockFiĀ deniedĀ that the majority of its assets were custodied at FTX, but it acknowledged, āWe do have significant exposure to FTX and associated corporate entities that encompasses obligations owed to us by Alameda, assets held at FTX.com, and undrawn amounts from our credit line with FTX.US.ā
According to Bloomberg, BlockFiĀ soldĀ $239 million of its own cryptocurrency to cover bankruptcy expenses and warned about 250 of its 370 workers that they would lose their jobs before filing. BlockchainĀ held a round of layoffsĀ this summer as well.
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