Posts | Crypto Insolvency | Turnpage Daily Briefing

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🪙 BlockFills Customer-Property Test Approaching

The BlockFills Chapter 11 in Delaware is shaping up as the most important crypto-creditor case of 2026. The debtors conceded at first-day hearings that customer funds were "always commingled" — which, under the Celsius Earn framework Judge Glenn adopted in 2023, pushes customers squarely into the unsecured class. The UCC is anchored by SBI VC Trade and Dominion Capital; FTI retention hearing May 28. Cleary's ad hoc group has not yet filed a plan term sheet.

What's worth watching: under the Third Circuit's In re FTX ruling, an examiner motion above the $5M threshold is essentially mandatory. Combined with the Dominion TRO record from S.D.N.Y. (Judge Vyskocil, Feb 2026), the U.S. Trustee has rich predicate for a § 1104(c) motion in the next sixty days.

Genesis vs. DCG is the parallel case to watch. The LOC's two-front campaign — Delaware Chancery ($2.2B) plus S.D.N.Y. adversary ($1B+) — totals $3.2B aggregate exposure. DCG's $1.1B promissory-note counterclaim sets up a substantive offset battle that will determine what residual proceeds reach customer creditors.

For distressed-debt buyers: price BlockFills GUC claims against the Celsius/FTX/Genesis framework. Cleary Gottlieb's "Novel Issues" insights series remains the canonical reference.

#CryptoBankruptcy #Chapter11 #CreditorRights #BlockFills #Restructuring

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