Dispute of billions: FTX, Three Arrows Capital and Sec against Blockfis Insolvency plans

Dispute of billions: FTX, Three Arrows Capital and Sec against Blockfis Insolvency plans
ftx, Three Arrows Capital (3AC) and the Securities and Exchange Commission (SEC) have joined together against the bankruptcy plans of Blockfi and uncovered a loss of billion dollars.
In a application submitted by FTX on June 7, it was argued that the plans proposed by Blockfi exploit the bankruptcy provisions. The submission entitled "Objection by the FTX debtor against the proposal of the Blockfi debtor to approved the disclosure declaration, the objection procedure and forms as well as the confirmation plan" underlines the critical affair, which deals with controversial transactions worth over one billion dollars.
On June 28, 2023, Blockfi presented two important documents to the court: the disclosure declaration and the second changed joint chapter 11 plan. The plan contains provisions that are known as the "Third Party Releases" and offer certain persons and companies that are involved in the bankruptcy proceedings.
These publications aim to treat a wide range of legal claims, lawsuit and other obligations that can arise during the bankruptcy proceedings and ensure that all further legal remedies that are considered fair and appropriate are granted. FTX decidedly rejects the declaration of disclosure and the proposed plan and claims that it unfairly reduce its considerable demands against Blockfi.
ftx indicates considerable repayment and security amounts in connection with a loan in which his trade division Alameda Research is involved and which amounts to a total of hundreds of million dollars. In addition, FTX indicates collateral of $ 1 billion, which Emergent Fidelity has done, a company founded by the CEO of FTX, Sam Bankman-Fried, to keep shares in Robinhood.
In addition to FTX, Three Arrows Capital (3AC) of the opposition also joined the plans of Blockfi. As one of Blockfi's most important creditors, 3ac denies the proposed plan and tries to protect his claims. 3ac intends to object to the application for disclosure and refers to violations of procedural justice and the requirements for a proper procedure. They argue that Blockfi can only make its claims disappear if they meet these basic requirements. The proposed confirmation procedures violate the automatic suspension applicable in chapter 15 case of 3AC. The debtors have not applied for an exemption from the suspension that prevents them from striving for a fair subordination of the 3AC claims.
In addition, the Securities and Exchange Commission (Sec) spoke out against the plans of Blockfi. In a limited objection and legal reservation, the SEC expresses concerns about the appropriateness of the disclosure declaration and various related matters. While Blockfi's lawyer has addressed some of the problems of the SEC, the SEC reserves the right to change their objection and possibly raise objections to confirmation of the plan for these or other reasons. The SEC does not emit any legal opinion on the agreement of the transactions described in the plan with the federal securities laws. Nevertheless, it reserves the right to contest transactions with crypto-assets.
After the Securities and Exchange Commission (Sec) had raised objections to blockfi, the company's creditors also expressed their concerns. They argue that the Blockfi's insolvency plan represents an expensive and complicated method in order to release managers from the responsibility for their poor finance decisions. Therefore, these creditors believe that the company should be liquidated instead.