BlockFi’s employee bonus plans draw objection from U.S. trustee

By Sarah Lizee

Olympia, Wash., Jan. 11 – BlockFi Inc.’s motion seeking approval of a key employee retention plan (KERP) and a target retention plan (TRP) drew an objection Tuesday from Regions 3 and 9 U.S. trustee Andrew R. Vara, according to documents filed with the U.S. Bankruptcy Court for the District of New Jersey.

The KERP seeks to include 95 employees, which is most, if not all, of the company’s remaining employees, and the TRP seeks to include 32 employees.

The cost of the KERP is around $9.9 million in total, and the cost of the TRP is about $2.43 million in total.

The participants under the KERP will receive on average $104,211.88 as a bonus, and the participants under the TRP will receive on average $75,781.25 as a bonus.

“The bonus motion fails to identify any factual information that would allow for approval,” Vara said in his objection.

The U.S. trustee said that while the company asserts that none of the proposed participants are insiders, its support for that assertion is found only in conclusory, self-serving statements included in the motion and in charts that were provided to Vara.

Other parties in interests, as well as possibly the court and the official committee of unsecured creditors, can only guess who the participants might be, and whether they might be able to argue that one or more of them is in fact an insider, the U.S. trustee said.

Vara also noted that the bonuses aren’t tied to any identifiable metric that would enable parties in interest and the court to determine whether the bonus payments are reasonable.

The motion also fails to identify the participants’ identities, job titles, job responsibilities, salary and other forms of compensation, and supervisors and/or who they supervise.

It also doesn’t identity whether the participants are employed by debtors or non-debtor affiliates.

Likewise, the motion doesn’t disclose the debtors’ management structure and where the participants fall within that structure, and it doesn’t provide information regarding the historical bonus structure for any participant.

Based in Jersey City, N.J., BlockFi is a crypto financial services company. The company filed bankruptcy on Nov. 28 under Chapter 11 case number 22-19361.

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