US Bankruptcy Court Approves BlockFi’s Employee Retention Program
Compensation programs for employee retention
The New Jersey bankruptcy court approved an employee retention program for BlockFi, a crypto asset (virtual currency) lending service that is undergoing bankruptcy proceedings, on the 28th. BlockFi can now offer bonuses to remaining senior employees.
Judge Michael Kaplan said the move “provides BlockFi and its employees an opportunity to keep moving forward and maximize the company’s assets.”
Last November, BlockFi had asked a court to approve a bonus payment to keep employees at the company after it filed for Chapter 11 bankruptcy protection.
Under this employee retention program, BlockFi will be empowered to pay employees bonuses equivalent to 42.5% or 9% of base salary, depending on their role. This could cost up to about ¥1.3 billion ($10 million).
BlockFi attorney Rush Howell explained that since filing for bankruptcy, the company has lost employees to other companies, including Walmart and Google. Eleven people, or 10% of the company’s workforce, left the company.
In light of the situation, Howell argued, “it is imperative to have a job retention program in place to keep key workers in the company.”
Chapter 11 of the U.S. Bankruptcy Code (Chapter 11)
A reconstruction-type bankruptcy legal system similar to the Civil Rehabilitation Law of Japan. The company will be restructured by reducing debts while continuing to operate. Debt collection will be suspended after the application, and the debtor will work on debt consolidation and formulate a reconstruction plan within 120 days in principle.
Cryptocurrency Glossary
background
The United States Trustee’s Office and BlockFi’s Board of Unsecured Creditors have contested the allegations. Meanwhile, a BlockFi HR representative explained that the employee retention program could not be postponed.
We also considered postponing the program to allow dialogue with the US Trustees and Creditors Committee. But there has been a further outflow of talent, raising concerns among employees about the receipt and timing of compensation.
The employee retention program does not apply to Insiders such as BlockFi’s directors, officers and their families, according to court documents.
Check financial documents for errors
BlockFi’s lawyers also acknowledged that there were errors in the financial documents filed at the hearing on the 27th.
A document uploaded a week ago alleged that BlockFi had $1.2 billion in exposure to failed cryptocurrency exchange FTX. That was about ¥26 billion ($200 million) more than previously known.
Attorney Joshua Sussberg explained that this was “genuinely wrong” and was due to not counting loans from Alameda Research backed by FTX’s utility tokens.
To sell loan receivables
BlockFi is in the process of selling loan bonds worth ¥20 billion.
These loans are for Bitcoin (BTC) mining companies and are backed by a total of 68,000 mining machines. Some of them are said to have fallen short of collateral due to the falling machine prices.
Relation: BlockFi to sell 20 billion yen worth of Bitcoin mining machine-backed loan
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