The bids for the loans backed by Bitcoin machines must be submitted by January 24.
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BlockFi, a bankrupt crypto lending firm, reportedly intends to liquidate $160 million in loans secured by over 68,000 Bitcoin mining machines as part of the bankruptcy proceedings.
BlockFi allegedly initiated the process of selling off the loans last year, according to two people "familiar with the matter" who conversed with Bloomberg on January 24.
The crypto lender declared Chapter 11 bankruptcy in November, blaming its demise on significant exposure to the now-defunct FTX cryptocurrency exchange.
The sources state that the deadline for bidders to submit offers for the loans is January 24. However, several of these loans have already slipped behind since then and could be undercollateralized given the decrease in the price of Bitcoin mining equipment.
Harrison Dell, director of the Australian law firm Cadena Legal, stated that if the Bitcoin mining equipment used as collateral is valued less than the loan amount, the loans are "not worth their paper value anymore to BlockFi."
According to Dell, the debt collectors bidding on the debts are probably doing it for "cents on the dollar."
He went on to say that selling the debt is most likely "all that the administrators" of BlockFi can salvage for these assets.
Dell added that the future of the crypto sector is just getting started. He stated:
"This is just the start of the asset sales from BlockFi and other crypto firms in Chapter 11 bankruptcy in the U.S."
According to BlockFi's bankruptcy filing from November, which lists over 100,000 creditors, its attempt to liquidate its loans is probably part of efforts to settle those debts.
BlockFi reportedly sold $239 million of its own cryptocurrency assets at the time of its bankruptcy to cover expenses and sent job-loss notices to almost 70% of its staff.
BlockFi requested funds from the court in a Jan. 23 declaration earlier this week to allow bonuses for key employees to keep them while the Chapter 11 bankruptcy procedures are underway.
Megan Crowell, chief people officer of BlockFi, stated to the court that without financial incentives, it is unlikely the company will be able to keep its staff.
Crowell thinks that without competitive wages, many employees will leave the company, which will have a negative financial impact on the company over the long term.
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