According to a recent court filing, bankrupt cryptocurrency lender BlockFi, which was caught up in the FTX contagion and filed for bankruptcy a few days after the exchange crashed, has reached a “in principle” agreement with the estates of FTX and Alameda Research for almost $1 billion. This agreement could result in full value recovery for BlockFi’s clients.
Claims against FTX and Alameda Research totaling $874.5 million will be settled for BlockFi. $250 million will be viewed as a secured claim, with payment to BlockFi receiving priority once FTX’s December bankruptcy plan is accepted by its creditors.
According to the settlement, BlockFi will be able to receive payment for its outstanding claims under FTX’s plan, just like other similar claims, as FTX will relinquish its rights against BlockFi. The accord still requires judicial approval.
“We’re happy to have worked with Judge Goldblatt to reach an agreement that upholds BlockFi’s claims against FTX for the full amount of loans to Alameda and assets on the FTX exchange, waives FTX’s “clawback” claims that might have diminished those claims, and grants BlockFi a partially secured claim,” said a statement sent by Kenneth Aulet, a partner at Brown Rudnick, who represented the Committee of Unsecured Creditors. “[It is] an excellent outcome for BlockFi’s customers and creditors.”
The relationship between FTX, Alameda, and BlockFi was intricate and multifaceted. FTX granted BlockFi a $400 million line of credit, and FTX—doing business as West Realm Shires—was one of BlockFi’s biggest debtors, claiming $275 million.
According to the filing, BlockFi’s bankruptcy administrators stated that “this negotiated agreement represents an excellent outcome for BlockFi and its customers – one better than could have been anticipated even on the effective date of the Plan.” “[This Plan] ensures that money reserved for litigation with FTX is directed instead to customer distributions.”