BlockFi and FTX and Alameda Research have reached a settlement wherein BlockFi will receive $874.5 million to assist in repaying consumers who were impacted by its bankruptcy.
In a recent court filing, the United States Bankruptcy Court for the District of New Jersey stated that BlockFi will get a combination of claims of $185.2 million against FTX and $689.3 million against Alameda Research.
Additionally, a secured claim of $250 million of the entire amount will be recognized.
BlockFi and FTX’s Settlement
The purpose of the allocation was to enable BlockFi’s clients to receive their monies more easily, which was a big step in the right direction toward overcoming the financial difficulties brought on by its Chapter 11 bankruptcy proceedings.
As per the petition, “BlockFi can now support the reorganization plan proposed by the FTX Debtors and help bring the FTX case closer to a close and payment on BlockFi’s allowed claims.”
BlockFi and the FTX Debtors reached a preliminary settlement in September 2023 when FTX agreed to give up nearly all of their claims for positive recoveries.
Payback Schedule to Give Customers Priority
The deal would be exceedingly beneficial for BlockFi and its customers, the court claimed. According to the document, “this negotiated agreement…represents an excellent outcome,” guaranteeing full recovery of particular claims.
Customers were set up to get their full claim values as long as FTX carried out its distribution intentions thanks to this agreement.
In addition, the Alameda Loan Claim’s secured interest expedited payments compared to unsecured claims. As FTX moves forward with its restructuring, “obtaining recognition of BlockFi’s security interest…entitles BlockFi to payment of that amount prior to payment of unsecured claims,” enabling faster client payouts and reducing risks.
The filing stated, “This outcome has been achieved with an early mediation.” “Much reducing litigation expenses and guaranteeing that funds set aside for FTX litigation are instead allocated to customer distributions.”