According to a document made on January 27, 2019, the New Jersey bankruptcy court Judge Michael Kaplan allowed (1) a petition made by the crypto currency lender BlockFi to pay its personnel up to $10 million as part of a "retention program."
As we had reported earlier that BlockFi had requested the permission to dole out bonuses to its employees to prevent them from leaving the firm. According to a court filing, BlockFi could pay its employees $9.98 million in three equal installments spread over one year.
The payout made to the insolvent company was split into two tiers: the first tier pays the personnel 42.5% of their base wage, and the second tier pays them 9% of their basic salary.
In the meantime, the document submitted to the court did not include any information on the number of workers who were qualified to receive the bonus, nor did it have any information regarding the requirements for any of the tiers. According to various sources in the media, there are now 130 people working for the company.
The reason the bankrupt company still wants to pay its employees their bonuses
Previously, the crypto lending company that declared bankruptcy said it was essential to pay its employees the bonus to continue benefiting from their services throughout the bankruptcy procedures.
According to Megan Crowell, who serves as the Chief People Officer at BlockFi, there was fierce talent competition, and the company's employees "had numerous prospects inside and outside of the crypto currency business."
On the other hand, the unsecured creditors of BlockFi stated that the proposed incentive was "broader and more costly than prior crypto instances."
In a separate development, other defunct crypto currency companies, such as Celsius and Voyager, had also demanded employee retention plans for their staff. Both companies maintained that the payment would assist in keeping the services of the rare skills that their employees gave and that this would be an advantage to them.
Additional Information Regarding BlockFi's Chapter 11 Filing
Recent financial filings have shown that BlockFi had a $1.2 billion liability to the crypto companies FTX and Alameda Research, both of which have since gone bankrupt.
The bankruptcy petition for the lender revealed that it had $415.9 million in assets on FTX and had loaned $831.3 million to Alameda. In addition, the company had 662,427 customers, and more than 70 percent had balances of less than $1,000.
In addition, a story published by Bloomberg on January 23 stated that the lender intended to sell loans totaling 160 million dollars that were collateralized by 68,000 mining equipment.
The lender's business, along with that of other miners, took a significant hit when Bitcoin's price dropped to an all-time low in 2022.
Additionally, the lender asserted ownership over Sam Bankman-shares Fried's of Robinhood before the company's seizure by US authorities. According to the lending institution, the stocks were used as security for a loan provided to Alameda by the lending institution.