Crypto lender BlockFills filed Chapter 11 bankruptcy in Delaware after losses, withdrawal freeze, and lawsuits, as the firm seeks restructuring to recover funds.
Crypto trading and lending firm BlockFills has filed for Chapter 11 bankruptcy after months of financial trouble. The company ceased withdrawals earlier this year and suffered increasing losses. The filing was in the United States Bankruptcy Court in the State of Delaware. Officials said the process will enable the company to reorganize and attempt to recover funds.
BlockFills files Chapter 11 after losses and withdrawal freeze
BlockFills follows its primary entity Reliz Ltd, that filed the bankruptcy petition on 15th March 2026. The filing also comprised three related companies linked to the business. Chapter 11 bankruptcy is a form that enables a company to remain in business as it restructures its debts.
Court documents revealed that the company has severe financial issues. Estimated assets range in value from $50m to $100m. However, total liabilities may be between $100 million and $500 million. This gap indicates that the company does not have sufficient funds to pay all the creditors.
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The filing also revealed that the company may be owing money to many investors. Reports said BlockFills expects between 1,000 to 5,000 creditors. The biggest unsecured creditor is 007 Capital LLC with a claim of approximately $17.1 million. Other large claims include $9.4 million owed to the Richard E. Ward Revocable Trust. Artha Investment Partners LLC is also a claimant with a claim for approximately $6.9 million.
The company had earlier in 2026 faced liquidity crisis. In February, BlockFills halted customer withdrawals following mounting losses. Reports said that the firm lost around $75 million in trading, lending and crypto mining operations. When withdrawals came to an end, many customers were concerned about their money.
Lawsuit and frozen Bitcoin increased pressure on the company
Legal issues made the situation harder for BlockFills. A United States federal judge recently issued an order to put 70.6 Bitcoin associated with the company on freeze for a period of time. The order followed a lawsuit filed by Dominion Capital. The lawsuit alleges that customer assets were commingled with company funds.
Court records stated that the frozen Bitcoin may be significant for the payment of creditors. When assets are frozen, the company cannot use the assets until a resolution to the case is reached. This makes it more difficult to carry out normal operations. Because of this, the firm chose to seek court protection under Chapter 11.
Company leaders changed as well during the crisis. Co-founder, Nicholas Hammer, resigned as chief executive officer. Joseph Perry is now acting as interim CEO in the restructuring period. The new leadership will collaborate with the court to identify solutions for creditors and customers.
Company hopes restructuring will recover value for creditors
BlockFills said the bankruptcy filing is aimed at stabilizing the business. The company is planning to search for new funding and potential buyers. Officials said they also will look at strategic deals that can help repay creditors. Chapter 11 states that the firm continues to operate during the study of these various options.
The company told the court that its aim is to deliver the best recovery for everyone. This includes investors, lenders, and customers who kept funds on the platform. However, recovery can take time since there can be a large number of claims that have to be reviewed. The court will determine how remaining assets should be distributed.
The case reveals that there are still risks involved in crypto lending and trading businesses. When markets fall, high-leveraged companies can lose quickly. Several crypto firms have been filing bankruptcy since 2022 for similar reasons. The case of BlockFills is another illustration of how rapidly liquidity problems can turn into complete insolvency.