Have you heard that cryptocurrency exchange BlockFi has recently filed for Chapter 11 bankruptcy? Maybe you registered for a BlockFi credit card after watching one of the commercials.

However, recent happenings in the market - one of them being a similar company FTX filing for bankruptcy - means they don't have enough money to cover their debts, and now they have filed for bankruptcy.

It's time to consider your options if you had money invested in their platform. In this blog post, I'll outline how you can try to get your money back from BlockFi.

What to Know about BlockFi and Bankruptcy:

The first thing to know is that BlockFi has filed "Chapter 11" Bankruptcy as of November 28th, 2022. That means they are officially seen as the "debtor" by the Bankruptcy Court, aka the party that owes debts. If BlockFi owes you money, that makes you a possible "creditor."

Named after the U.S. bankruptcy code 11, corporations generally file Chapter 11 if they are insolvent and require time to restructure their debts. This version of bankruptcy gives the debtor a fresh start. However, the terms are subject to the debtor's fulfilling obligations under the reorganization plan. During a Chapter 11 proceeding, the court will help a business restructure its debts and obligations. In most cases, the firm remains open and operating. Many large U.S. companies file for Chapter 11 bankruptcy and stay afloat. Such businesses include automobile giant General Motors, the airline United Airlines, retail outlet K-mart, and thousands of other corporations of all sizes.

The biggest advantage for a company is that the business can continue operations through the reorganization process. This allows them to generate cash flow that can aid in the repayment process.

But how do you get involved with the repayment process? Well, the first step is to file a "Proof of Claim."

What is a Proof of Claim?

Proof of claim is an essential element in the bankruptcy process. It documents your right as a creditor to repayment from the debtor. The proof of claim describes the type of claim, priority status, and the amount of the outstanding debt.

The debtor's chapter 11 bankruptcy filing may significantly impact a creditor and can jeopardize its ability to handle its financial responsibilities. Filing a chapter 11 bankruptcy proof of claim can affect whether, how, and when you receive repayment from a debtor.

Chapter 11 creditors technically do not need to file a proof of claim if the debtor has accurately described the nature and amount of the debt owned in its schedules and has not designated the debt as disputed.

But even though you are not technically required to file a proof of claim, it can be helpful. For example, the proof of claim will supersede the information regarding the claim that the debtor listed in their schedule of assets and liabilities. Additionally, if you do not file a proof of claim form, the bankruptcy court will accept the information the debtor listed. Filing your form allows you to dispute any inaccuracies in the debtor's schedules such as:

  • The category of debt
  • The amount listed
  • The creditor is not listed
  • The claim is designated as disputed, unliquidated, or contingent

Also, if you do not receive notice from the court, it could mean that the company has overlooked its financial obligation to you. But don't worry. You still have a legal path to recompense through a "Proof of Claim."

What Information Do I Need to File against BlockFi?

The following is a list of the important details a creditor will need to have ready to complete a Proof of Claim form in a bankruptcy case:

  • Debtor's Information: Debtor's Name and the relevant Bankruptcy Case Number
  • Creditor's Information: Name of contact person, contact information (including phone, email, and mailing address)
  • Classification Section of the Claim: select either Secured, General Unsecured, or Priority Unsecured
  • The amount owed as of the Petition Date
  • Basis of the claim: with documents provided to support the claim such as invoices of goods or services purchased, delivery receipts, contracts, loan or credit card balance, legal settlements, etc)
  • Attach documentation that shows an itemization of charges to demonstrate the claim amount owed
  • Signature of the Creditor or an Authorized Representative

How to File a Proof of Claim Against BlockFi:

  • Identify the Case - The first thing you will want to do is find out where the debtor has filed for bankruptcy and the case number of their filed case. This information will help attach your claim to the appropriate bankruptcy filing. BlockFi's Chapter 11 filing case number is 3:22-bk-1936
  • Download the Form - The Administrative Office of the U.S. Courts provides the form for free online.
  • Review the Instructions - the court lists out the steps needed to complete your proof of claim. It's useful to take 10 minutes and review them.
  • Fill the Form Out - This can be done on your digital device, or by hand, but fill out the form's questions to the best of your ability. Be prepared to sign the document.
  • Attach Copies of Any Supporting Documents - You will not want to give up the original copies of any supporting documents with your filing in case they are lost or damaged. Instead, the court asks that you attach redacted copies of any documents that show that the debt exists, a lien secures the debt or both.
  • File it with the Appropriate Court - As the creditor, you must file the form with the clerk of the same bankruptcy court in which the bankruptcy case was filed. In this case, BlockFi filed in the United States Bankruptcy Court for the state of New Jersey.

You have several options to submit your filing.

  • Submit your Proof of Claim by Mail - The State of New Jersey Bankruptcy Court accepts mail at: Martin Luther King, Jr. Federal Building, 50 Walnut Street, Newark, NJ 07102
  • Submit an Electronic Proof of Claim - The court provides a website you can file the claim through.

Of course, if you want assistance, you can always generate and file your claim with Dispute in 5 minutes from your phone or computer.