NJ Bankruptcy Court Denies Challenge to BlockFi Bankruptcy Plan and Gatekeeper Provision
On Friday, July 18, 2025, the United States Bankruptcy Court for the District of New Jersey denied a Motion for Reconsideration and a Motion to Expand the Gatekeeper Provision filed by Dereje Lakew in the bankruptcy case of BlockFi Inc. The court’s decision came after Lakew sought to challenge previous rulings regarding his claims against the company and certain third parties, including Gemini Trust Company.
The court ruled that Lakew failed to meet the necessary criteria for reconsideration under Federal Rules of Civil Procedure, specifically Rule 59(e) and Rule 60(b). The judge found that Lakew did not present any new evidence, a change in controlling law, or clear errors of law or fact. As a result, the court determined that Lakew was attempting to relitigate issues that had already been decided.
Lakew had entered into a loan agreement with BlockFi and its affiliated debtors, borrowing $20,190, which was secured by Bitcoin collateral. He claimed that he was not adequately informed about the risks associated with the use of his collateral for trading and lending activities. Additionally, he alleged that former executives of BlockFi breached their fiduciary duties by failing to protect assets and making false representations about the company’s financial stability.
The Third Amended Joint Chapter 11 Plan, which was confirmed by the court on October 3, 2023, included a Gatekeeper Provision that required court approval before pursuing claims against the company’s former executives. Lakew opted out of the releases contained in this plan, arguing that the Gatekeeper Provision violated his rights and prevented him from asserting direct claims.
The court ruled that Lakew’s claims were derivative in nature, meaning they did not represent a distinct injury unique to him, but rather a harm shared by all BlockFi customers. The judge emphasized that under Delaware law, a plaintiff must demonstrate a particularized injury separate from that suffered by other creditors to assert direct claims. The court reaffirmed its application of Delaware law, as specified in the governing law clause of the Loan Security Agreement.
In addressing Lakew’s assertions regarding the Gatekeeper Provision, the court noted that the provision serves as a procedural mechanism rather than a substantive barrier to direct claims. It allows the court to assess whether a proposed claim is direct and not subject to the releases in the confirmed plan before litigation can proceed.
The court also rejected Lakew’s claims against Gemini Trust Company, stating that Gemini qualified as a Released Party under the Plan, having acted as the Debtor’s agent and custodian. The court found that Lakew’s allegations against Gemini were based on conduct that affected all BlockFi customers and did not indicate any specific wrongdoing directed uniquely at him.
Ultimately, the court determined that Lakew’s challenges to the Gatekeeper Provision constituted an untimely collateral attack on the Confirmation Order and violated the provisions of 11 U.S.C. § 1141(a). The court emphasized that the confirmed plan binds all parties involved and that Lakew had failed to raise timely objections or appeals concerning the plan.
In conclusion, the court denied both motions filed by Lakew, reinforcing the validity of the confirmed bankruptcy plan and the procedural requirements established therein.
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