Aaron Bennett, a popular YouTube finance personality, recently released a video explaining how he plans to vote on the Blockfi bankruptcy plan and outlining his recommendations for other creditors.
Disclosure: Everything in this article is our (TheDroidGuy’s) interpretation of what Aaron Bennett MAY be suggesting. You must make your own interpretation by watching his video to make your own conclusion. We are not making any recommendations. Everything written in this article is for informational purposes only. Please do your own research and make your own conclusions. Do NOT make any financial decisions based on this article.
Here is a summary of his main recommendations:
- Vote to accept the plan
- Do not opt into the convenience class unless you have a very small claim
- Do not opt out of the third party releases
Detailed Overview of Recommendations
Vote to Accept the Plan
In the video, Aaron states that he plans to vote to accept the bankruptcy plan proposed by Blockfi. He notes that this is the quickest path to getting some funds back to customers. While the initial distribution may only return 20-30% of funds, accepting the plan allows the bankruptcy process to move forward so that creditors can receive additional distributions from litigation in the coming years.
Aaron emphasizes that rejecting the plan would send everything “back to the drawing board” and likely further delay any distributions to creditors. For these reasons, he believes accepting the plan, despite its flaws, is the best option for most creditors.
Avoid Opting Into the Convenience Class
The plan includes an option where creditors can voluntarily limit their claim to $3,000 in order to receive an automatic 50% payout on that amount. This is known as the “convenience class.”
Aaron advises creditors to avoid opting into this class unless they have a very small claim. For example, if you have a $4,000 claim, reducing it to $3,000 and receiving the 50% payout of $1,500 makes sense. However, for larger claims, the 50% payout likely does not exceed what you would eventually recover by keeping your full claim amount.
He notes that current market rates for selling Blockfi claims are around 20-25% of the claim value. So opting into the convenience class only makes sense if the 50% payout exceeds the 25% you could get immediately by selling your claim.
Do Not Opt Out of Third Party Releases
The plan includes broad third party releases, which prevent creditors from pursuing legal action against Blockfi executives, directors, and related parties. Aaron states that he does not plan to opt out of these releases.
He notes that opting out would only make sense if you already have plans to pursue legal action against Blockfi. For most creditors without legal resources, he thinks opting out could create potential hurdles to receiving your distribution without offering much upside.
Unless you have a specific legal strategy in mind, Aaron suggests accepting the third party releases as they stand in the plan. This avoids any uncertainty from opting out.
How to Vote on the Blockfi Bankruptcy Plan
Aaron Bennett believes most Blockfi creditors should vote to accept the plan, avoid opting into the convenience class, and accept the third party releases. This path provides the fastest route to receiving an initial distribution while preserving options for additional litigation recoveries over time.
He emphasizes accepting the plan is critical to move the process forward quickly. While the plan is imperfect, rejection would only further delay customer funds with little upside. By following his recommendations, creditors can maximize their potential recoveries during this difficult bankruptcy process.