Mediation Sought for Resolution of 3AC's $284M Claim in BlockFi Bankruptcy
A U.S. bankruptcy judge has dismissed Three Arrows Capital's bid to lift the stay on its claim against BlockFi, proposing a mediation process in January as an alternative to a February hearing.
The core of the dispute centers around $284 million in payments to BlockFi, with 3AC seeking to pursue this claim against the crypto lender. However, Chief Judge Michael Kaplan of the U.S. Bankruptcy Court in New Jersey has advocated for a mediation period to concentrate on 3AC's "preferential payments" to BlockFi.
In the event of an impasse regarding the distribution of funds back to the defunct hedge fund, a two-day hearing is set to commence on February 5 to delve further into the issue.
Kaplan has voiced apprehension regarding the protracted timeline and its potential impact on anxious creditors, underscoring his dedication to expeditious resolution.
The crux of the disagreement hinges on a pivotal legal question: the precise insolvency date of 3AC and how it correlates with the timing of the hedge fund's payments to BlockFi.
Emotions ran high in court, with BlockFi's counsel suggesting that 3AC's legal representation was needlessly prolonging proceedings and accruing substantial legal fees. In response, 3AC's attorney from Latham & Watkins rebuffed these remarks as "wholly inappropriate and unfounded." He reminded the court that 3AC's founders had abruptly departed, necessitating extensive efforts to reconstruct records and secure assets for creditors.
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