By George Ward
According to reports, BlockFi wants to sell $160 million in loans supported by approximately 68,000 BTC mining machines amid its ongoing bankruptcy proceedings.
BlockFi’s Loan Selloffs
A new report by Bloomberg citing inside sources claimed that the crypto lender commenced the loan selloff in 2022. Last November, the crypto lending firm applied for Chapter 11 bankruptcy.
The firm cited its substantial involvement with the now non-existent crypto exchange FTX as the reason for its failure. However, sources claim that most of the loans have defaulted and might be undercollateralized due to the reduced price of BTC mining equipment.
Meanwhile, Harrison Dell, a crypto lawyer and Director of Cadena Legal law firm, said that if BTC machines used as loan collateral become less than the loan’s value, these machines have lost their paper value.
According to Dell, it is likely that the individuals participating in the bidding process for the debts are debt-collection organizations who will be purchasing them for a fraction of their value.
He also stated that the sale of the mining machines is probably the only way that the administrators for BlockFi can recover anything of value from these assets. Furthermore, Dell indicated that this is only the start of what the crypto industry can expect.
BlockFi’s decision to sell off its loans is one of its measures to fulfill its obligations to its creditors. According to the company’s bankruptcy filing in November, BlockFi has about 100,000 creditors.
Also, reports alleged that BlockFi sold over $239 million worth of crypto to cater for its bankruptcy expenses. Furthermore, the crypto firm warned that it would lay off 70% of its employees.
BlockFi Fighting To Retain Top Talents
In a related development, BlockFi, in a court declaration on Monday, asked the court to release funds for bonuses for top employees. The company believes it can retain its top talents with these bonuses despite its ongoing bankruptcy proceedings.
Megan Cromwell, the Chief People Officer at BlockFi, stated that without court approval of the retention petition submitted on November 28th, 2022, BlockFi could face a greater risk of losing key employees.
In a 14-page witness declaration submitted on January 23rd, Cromwell said, “we deemed it necessary to extend the deadline for dialogue with the Committee and US Trustee. However, it led to further personnel loss and uncertainty about when retention payments would be received.”
Furthermore, the creditor’s committee and US Trustee have both opposed BlockFi’s petition. Since filing for bankruptcy in November, BlockFi has seen 11 employees depart from the company.
Meanwhile, BlockFi is not the only crypto firm fighting to retain its top workers amid bankruptcy proceedings. Crypto lender Celsius recently received approval from the court to pay workers helping with its bankruptcy process.