TechFlow reports that Michael Kaplan, a bankruptcy judge in the U.S. District of New Jersey, has set up a mediation window for lawyers from both companies to resolve key issues—primarily 3AC's "preferential payments" to BlockFi—within one month.
If the parties fail to settle the dispute over fund ownership, Kaplan plans to schedule a two-day hearing starting February 5 to debate the matter. The controversy involves substantial sums amounting to hundreds of millions of dollars. The central issue is when 3AC became insolvent and how that date relates to the timing of the hedge fund’s payments.
Tensions between the two sides were evident in court, with BlockFi’s legal team accusing 3AC of having a “runaway” legal counsel who has delayed proceedings and accumulated more than $16 million in legal fees. In response, 3AC’s lawyer called these remarks “entirely inappropriate and reckless,” stressing that 3AC’s founders had “evaded responsibility” and emphasizing the need to reconstruct corporate records, locate assets, and safeguard them for creditors.
