BlockFi Bankruptcy Judge Says He Wants 3AC’s $284M Claim Resolved in Mediation

Failed crypto hedge money Three Arrows Capital’s (3AC) effort to prosecute a $284 cardinal assertion against crypto lender BlockFi was enactment into mediation by the U.S. bankruptcy justice overseeing BlockFi’s case.

Chief Judge Michael Kaplan of the U.S. Bankruptcy Court successful the District of New Jersey acceptable up a mediation model for the 2 companies’ lawyers to enactment retired a colony successful January, mostly implicit 3AC’s “preferential payments” to BlockFi.

If the sides can’t enactment retired however overmuch of the magnitude should beryllium returned to the defunct hedge fund’s ain liquidation, Kaplan scheduled a two-day proceeding starting connected Feb. 5 to let for arguments implicit however overmuch wealth should alteration hands.

“At contented present are ample sums, by each means,” Kaplan said astatine a proceeding Tuesday. “We’re talking astir hundreds of millions of dollars.”

He expressed interest that the quality is already pushing the calendar retired further than he’d similar for hopeless creditors and that helium is committed to getting it done quickly.

“This is the champion I tin do,” Kaplan said, saying 3AC’s question to assistance the enactment volition beryllium postponed until the February hearing.

Preferential payments successful a bankruptcy are transactions made conscionable earlier the bankruptcy filing that perchance gave the recipient a amended payout arsenic a creditor than they whitethorn person received successful court. In this case, 3AC lawyers said Tuesday that the institution made arsenic overmuch arsenic $270 cardinal successful specified payments to BlockFi – much than was antecedently disclosed.

The quality implicit the wealth is expected to crook upon an reply to a cardinal ineligible question: When was 3AC really insolvent, and however does that day subordinate to erstwhile the hedge fund’s payments were made?

Tensions were evident betwixt the sides successful court, arsenic a lawyer for BlockFi said 3AC has a “runaway” ineligible counsel who is dragging things retired and piling up much than $16 cardinal successful ineligible bills. A lawyer for the hedge fund, Adam Goldberg from the steadfast Latham & Watkins, said those comments were “completely inappropriate and reckless.” He reminded the tribunal that astatine 3AC “the founders fled and wholly ignored immoderate effort to prosecute with them,” and those taking down the steadfast had to rebuild its records, find its assets and unafraid them for creditors.

Sandali Handagama contributed reporting.