The crypto lender has $355 million stuck on FTX, and the exchange’s sister company Alameda Research has defaulted on a $680 million loan, according to the first day hearing of its bankruptcy proceedings.
BlockFi filed 15 motions on November 28 that were approved by the court in the first day hearing on November 29.
It includes the redaction of personal information for its 50 largest creditors and the appointment of Kroll Restructuring Administration as its claims and noticing agent — the same firm chosen by FTX for its chapter 11 bankruptcy case.
BlockFi stated in an email to concerned clients that the approved motions allow it to continue “core operations” and pay its employees and independent contractors during the restructuring process.
BlockFi estimates its monthly wage bill to be around $5.8 million, and it owed about $1.5 million in wages when it filed the motion on Nov. 28.
According to a Nov. 29 CNBC report, BlockFi’s attorney, Joshua Sussberg, also stated during the hearing that BlockFi intends to reopen withdrawals to customers at an unspecified time.
In addition, he noted that he is confident that the company will be able to salvage the business after the restructuring.
While FTX and Alameda owe BlockFi approximately $1 billion, the financial situation is complicated by FTX US’s $400 million line of credit extended to BlockFi on July 1.
According to BlockFi, which blamed its problems on the FTX collapse, it still owes $275 million to FTX US in a deal that it claims was agreed to by 89% of its shareholders.
BlockFi received the funds after becoming entangled in the contagion caused by the collapse of Terra’s stablecoin on May 10. BlockFi revealed that the loan will mature on June 30, 2027, with a 5% interest rate.
Furthermore, on November 28, BlockFi sued Bankman-holding Fried’s company, Emergent Fidelity Technologies, for collateral that Emergent had pledged to pay on November 9, which included shares in the online brokerage Robinhood.
The next hearing is scheduled for January 9.
