Thread by @nikhileshde

Good morning folks. The New Jersey Bankruptcy Court will be holding @BlockFi's First Day hearing at 11:30 a.m. ET. The general public can tune in via the Zoom link at the bottom of this page, and of course I will be tweeting for @CoinDesk: njb.uscourts.gov/BlockFi#Hearin… #BlockFi

@BlockFi @CoinDesk Chief Judge Michael Kaplan is opening with some housekeeping; Michael Sirota introduces himself on behalf of BlockFi

@BlockFi @CoinDesk BlockFi cofounders/execs Zac Prince and Flori Marquez are in attendance; US Trustee's office has a representative; Eric Winston representing West Realm Shires (dba FTX US) is appearing virtually

@BlockFi @CoinDesk Joshua Sussberg of Kirkland & Ellis is kicking proceedings off in full with a presentation, though there are some technical difficulties
"Technical difficulties kind of reflect where we are right?" asks Judge Kaplan #BlockFi

@BlockFi @CoinDesk The presentation is beginning with this tweet, posted when BTC was worth barely over $1 apparently

https://twitter.com/LeeSharpeNFL/status/1360288214930493443

@BlockFi @CoinDesk "I want to be very clear, this is the antithesis of FTX. Where FTX is talking about loss of controls and some of the worst governance anyone has seen ... this is completely 180 degrees, a different story," Sussberg says #BlockFi

@BlockFi @CoinDesk Now reiterating points from the first day filing (see here: docdroid.net/dvgRC8u/x3teca…) #BlockFi

@BlockFi @CoinDesk We're doing a history of bitcoin and crypto. So far covered Bitcoin Pizza Day, BTC's potential as a store of value, Sussberg promises "we're going to talk a lot today about stablecoins" #BlockFi

@BlockFi @CoinDesk Sussberg says K&E will post a copy of his presentation to the claims agent website. Will share whenever that happens. #BlockFi

@BlockFi @CoinDesk After a quick intro to Prince and Marquez, Sussberg says BlockFi is being divided into retail and institutional. Retail = individuals, small biz; institutional = hedge funds, market makers, prop shops #BlockFi

@BlockFi @CoinDesk BlockFi intends to file a motion to "allow customers to withdraw from their personal wallets ... because we do not believe that is property of the estate," Sussberg says #BlockFi

@BlockFi @CoinDesk Quick history of #BlockFi. Sussberg says BlockFi never launched a token, secured 47 money transmission and lending licenses from 32 states, mentions settlement with @SECGov and state regulators

@BlockFi @CoinDesk @SECGov Layoffs will save $34 million annually, Sussberg says. BlockFi currently employees 292 employees and 82 contractors; layoffs will hit 2/3 of co #BlockFi

@BlockFi @CoinDesk @SECGov BlockFi has 8 entities (subsidiaries?) which in turn have a total of 4 subsidiaries; also co-owns BV Power Alpha LLC. Not all of BlockFi's entities are debtors in this bankruptcy process #BlockFi

@BlockFi @CoinDesk @SECGov Funded debt = $400 million unsecured; $275 million worth of USDC = principal amount outstanding #BlockFi

@BlockFi @CoinDesk @SECGov FTX holds one special voting stock share tied to its loan and option agreement to acquire BlockFi next year. "Suffice it to say that transaction is not happening," Sussberg says #BlockFi

@BlockFi @CoinDesk @SECGov Sussberg is explaining the UST collapse now #BlockFi

@BlockFi @CoinDesk @SECGov Three Arrows Capital was BlockFi's second-largest borrower client. "The impact on BlockFi was tremendous," Sussberg says #BlockFi

@BlockFi @CoinDesk @SECGov "BlockFi had ... $355 million in digital assets that unfortunately are now frozen on the FTX platform," Sussberg says #BlockFi

@BlockFi @CoinDesk @SECGov BlockFi also had $671 million in outstanding loans to Alameda which are now defaulted, Sussberg said #BlockFi

@BlockFi @CoinDesk @SECGov .@BlockFi clients with questions can email [e-mail], Sussberg says #BlockFi

@BlockFi @CoinDesk @SECGov First story on the #BlockFi bankruptcy hearing here:
coindesk.com/policy/2022/11…

@BlockFi @CoinDesk @SECGov Back to tweeting. They've been going over the cash management system and trying to clarify the timeline for the last 20 minutes or so. #BlockFi

@BlockFi @CoinDesk @SECGov All employees will continue to get paid through layoff notice period but new attorney reiterates 2/3 will be laid off #BlockFi

@BlockFi @CoinDesk @SECGov Talking about whether or not to allow #BlockFi to file a consolidated top 50 list of creditors (and redaction questions). Judge Kaplan notes that this same issue has come up in Delaware and SDNY bankruptcy courts. He'll allow an interim order to pub redacted version

@BlockFi @CoinDesk @SECGov The court, US Trustee and SEC will get unredacted versions #BlockFi

@BlockFi @CoinDesk @SECGov So far they're working through cash management, making sure BlockFi can pay utilities, vendors, etc. One vendor providing engineering support terminated its contract with BlockFi #BlockFi

@BlockFi @CoinDesk @SECGov BlockFi attorney says they had a call with Sullivan & Cromwell, FTX's law firm, last night over its motion to transfer collateral from an FTX entity to a neutral third party #BlockFi

@BlockFi @CoinDesk @SECGov Winston of Quinn Emmanuel representing FTX said "we're continuing to investigate and we reserve all rights in that respect" ... 1+ FTX debtor estates may have an interest in the collateral #BlockFi

@BlockFi @CoinDesk @SECGov And that concludes hearing 1. Hearing 2 appears to be set for Jan. 9, 2023 #BlockFi