Bankruptcy judge approves BlockFi’s employee retention program

A New Jersey bankruptcy court judge has approved BlockFi’s request to offer bonuses to top staff.

“It offers the debtor and the employee an opportunity to move forward and maximize the estate,” Judge Michael Kaplan said in a hearing on Friday. “I’m happy to approve it going forward.”

The failed crypto lender previously said it is losing employees to other companies in a “war for talent,” including Walmart, Google and Block Inc. Eleven employees have left BlockFi since the firm filed for bankruptcy protection in November, lawyer Rush Howell said during the hearing, representing nearly 10% of the firm’s remaining workforce.

“This was a perfect mix for potential attrition and unfortunately the debtors have seen that attrition,” Howell said. “It’s essential that the debtors institute these retention programs to keep critical workers with the company.”

The retention program filed in court authorizes the BlockFi debtors to implement a program that would offer employees bonuses worth 42.5% or 9% of their base salary, depending on their role. The program could cost up to $10 million.

During the hearing, BlockFi lawyers also acknowledged a redaction “snafu” that happened earlier this week. Lawyers mistakenly uploaded unredacted financial documents. The new figures prompted media to report that secret financials showed BlockFi had a $1.2 billion exposure to failed crypto exchange FTX — $200 million more than was previously known.

“What happened here is purely a mistake,” said lawyer Joshua Sussberg. “I want to be very clear there are no such secret financials.»

Sussberg said BlockFi’s numbers varied in court documents because one figure marked a loan from Alameda Research, which used FTX’s native utility token as collateral, down to zero.

Disclaimer: Beginning in 2021, Michael McCaffrey, the former CEO and majority owner of The Block, took a series of loans from founder and former FTX and Alameda CEO Sam Bankman-Fried. McCaffrey resigned from the company in December 2022 after failing to disclose those transactions.

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