On March 15, 2026, Reliz Technology Group Holdings Inc. and three affiliated debtor entities—collectively operating under the trade name “BlockFills”—filed Chapter 11 petitions in the United States Bankruptcy Court for the District of Delaware before the Honorable Thomas M. Horan. The filings followed years of cascading financial losses, two prepetition customer lawsuits with temporary restraining orders, and the collapse of multiple recapitalization attempts.

Less than four weeks after the Petition Date, the Debtors filed a Joint Chapter 11 Plan, a Disclosure Statement, and a Solicitation Procedures Motion on April 7, 2026, establishing a compressed timeline targeting a June 22, 2026 Confirmation Hearing. The Plan features a dual-track “toggle” mechanism allowing the Debtors to elect between a customer-led NewCo Transaction and an Alternative Transaction through a Section 363 competitive sale process.

The case is proceeding on an aggressive timeline. Bidding procedures approval is sought for April 16, 2026, with a Bid Deadline of May 8, an Auction on May 13, a Disclosure Statement Hearing on May 12, solicitation through June 15, and a Confirmation Hearing on June 22, 2026. The parallel timing of the sale process and plan solicitation is carefully designed to preserve the dual-track toggle mechanism.

The period from late March through early April 2026 has seen a rapid escalation of both contested matters and restructuring planning. The following timeline captures the most significant recent events in the case.

BlockFills was founded in 2017 as a digital asset brokerage, initially operating through Reliz Ltd., a Cayman Islands entity, with $250,000 in equity and a $750,000 line of credit. The company began providing institutional cryptocurrency brokerage services in 2018 and expanded into collateralized lending in 2019. The business served exclusively institutional, high-net-worth, and sophisticated traders—no retail customers.

Capital Raises

Core Business Lines

BlockFills operated a proprietary front-end trading platform (“Vision Trader”) with API access, aggregated liquidity consolidating order books from multiple exchanges into a unified pool with smart order routing, and a daily settlement system with a 4:00 p.m. Central Time cutoff. The company also offered OTC derivatives for Eligible Contract Participants, collateralized lending with liquidation rights upon borrower default, and mining services including pool access, trading/OTC support, and treasury services.

The Debtors’ corporate structure encompasses four debtor entities and numerous non-debtor affiliates across multiple jurisdictions, including Delaware, Illinois, the Cayman Islands, the United Kingdom, UAE, Brazil, Ireland, and Lithuania. Regulatory licenses were held across several jurisdictions, including FinCEN MSB registrations, FCA authorization in the UK, and CIMA registration in the Cayman Islands.

Banking relationships were maintained with Silvergate Bank and Signature Bank from 2018 through their failures in March 2023, after which the Debtors sought alternative banking solutions.

The Debtors’ financial distress stemmed from multiple, overlapping sources of loss that collectively overwhelmed the balance sheet. The following chart illustrates the approximate magnitude of each major loss event.

Babel Finance (~$8.5 Million)

In 2022, BlockFills loaned a net 123 BTC, 500 ETH, and 5,000 USDC to Babel Finance. Babel Finance filed for bankruptcy in Singapore on March 6, 2023, and the loan is deemed unrecoverable.

Coinsource (~$3.6 Million Petition-Date BTC Value)

A 50 BTC loan made in 2022, valued at approximately $1 million at origination, resulted in borrower default. BlockFills obtained a $1.75 million judgment that remains unsatisfied. At the Petition Date, the 50 BTC was worth approximately $3.6 million.

AEXA Digital Infrastructure (~$12 Million Nexo Settlement)

An Equipment Loan for Lease co-funded with Nexo Capital Inc., backed by RedBird Capital Partners. AEXA began missing payments in 2022, owed $14.75 million in principal and interest, and ultimately filed for bankruptcy. BlockFills settled with Nexo in late 2024 for approximately $12 million, which the First Day Declaration describes as “severely weakening BlockFills’ balance sheet and liquidity.”

Celsius Network (~$4.8 Million Outstanding)

In late 2019, BlockFills borrowed ETH from Celsius under a Digital Asset Lending Agreement for co-investment in the Grayscale Ethereum Trust. A dispute arose when Celsius demanded return of both the initial ETH and all transaction proceeds. UK arbitration commenced in May 2021, with the arbitrator awarding Celsius the full initial ETH plus all proceeds. The award was upheld on appeal in 2024. Settlement resulted in an upfront payment of $3,602,140.82 and a remaining obligation of $12,651,011.70 memorialized in two Promissory Notes entered June 14, 2024. Approximately $4.8 million remains outstanding, with no payments made since August 2025.

Mining Hardware Investment

Series A proceeds were deployed in late 2021 and early 2022 into Bitcoin mining hardware. The data site partner was not operationally ready when hardware was to be placed, delaying activation. The 2022 mining industry downturn, driven by rising energy costs, prevented recoupment, resulting in significant losses.

Beginning in late summer 2025, the Debtors undertook a leadership and governance reset, implementing operational controls including daily asset reporting, tighter exposure oversight, wind-down of certain business lines, discontinuation of mining, and cost reductions.

Despite the breadth of the prepetition marketing efforts, the process “failed to advance as quickly as the Debtors’ businesses deteriorated.” Additional potential purchasers have contacted the Debtors since the Petition Date.

In the weeks immediately preceding the filing, two customer lawsuits were filed alleging misappropriation of customer funds, conversion, breach of contract, and fraud-based claims. Both courts granted temporary restraining orders that significantly restricted the Debtors’ operations and asset control.

The automatic stay imposed by the Chapter 11 filing on March 15, 2026 halted these actions. A Preliminary Injunction Order was subsequently entered on March 26, 2026, enjoining director and officer litigation until April 16, 2026, in connection with an adversary proceeding filed on March 25, 2026.

Special Committee Formation

Three days before the Petition Date, on March 12, 2026, the Debtors formed a Special Committee consisting solely of a single disinterested director. The Special Committee, advised by Cole Schotz P.C. as independent counsel, is tasked with investigating “certain historical transactions and conduct.” As discussed below, the scope of Plan releases is expressly conditioned on the outcome of this investigation—a notable and consequential structural feature of the Plan.

Workforce at Filing

By the Petition Date, the Debtors had reduced their workforce to 14 full-time employees and one independent contractor, following a reduction in force on March 6, 2026. Total prepetition employee obligations authorized for payment under the Interim Order amount to only approximately $111,000, reflecting the already-streamlined nature of operations.

The cash collateral dispute is the central contested matter in these early-stage proceedings. Cash collateral—expressly defined to include cryptocurrency—is the Debtors’ sole source of liquidity. The dispute involves the interplay between the Debtors’ need for operational funding, Celsius Network’s secured creditor protections, and objecting customers’ assertions that their deposited digital assets are not property of the estate.

Celsius’s Secured Position

Two Promissory Notes (the “$12.6M Note” and the “$3.6M Note,” both entered June 14, 2024) purportedly grant Celsius a first-priority security interest in substantially all of the Debtors’ assets, with interest accruing at 12% per annum. Multiple non-debtor entities also serve as guarantors. The Debtors assert, however, that Celsius’s purported lien on certain assets, including cash accounts, “was not properly perfected.”

Evolution of Cash Collateral Orders

The progression from the First Interim Order to the Second Interim Order reflects several notable developments: (i) a fivefold increase in authorized spending, indicating the Court’s increasing comfort with the Debtors’ operations and adequate protection framework; (ii) the addition of the Consent Parties concept, formalizing the role of the objecting customers in cash collateral governance; (iii) the introduction of a Trigger Event mechanism that creates an early warning system protecting against excessive depletion of estate assets; and (iv) a Professional Fee Escrow ensuring that professional fees are separately reserved.

The Trigger Event occurs when the fair market value of cash and cryptocurrency in the Debtors’ possession, minus the Interim Amount and the Contested Amount, falls to $10 million or below. The “Contested Amount” is defined as the value of any assets subject to an order of any court finding such assets are not estate property, granting segregation, or restraining use. The Second Interim Order also draws a distinction between cryptocurrency and “Non-Crypto Assets.”

A critical threshold legal question pervades these cases: whether digital assets deposited by customers constitute property of the Debtors’ estates under Section 541 of the Bankruptcy Code, or are held in trust and excluded under Sections 541(b) and 541(d). The resolution of this question has cascading implications for virtually every aspect of the case.

The Debtors’ Legal Arguments

The Debtors’ Reply (Docket 108) provides a detailed rebuttal organized around several interconnected legal and factual arguments. Property held by a debtor is presumptively property of the estate under Section 541(a)(1), and the burden falls on any party challenging this presumption. The Debtors cite In re Majestic Star Casino, LLC and In re Amp’d Mobile for the propositions that property in a debtor’s possession is presumed to be estate property and that unrelated commercial entities are presumed to be in a debtor-creditor, not trust, relationship.

The BlockFills Client Agreement contains three separate provisions explicitly disclaiming any fiduciary relationship. The agreement authorizes BlockFills to transfer margin to exchanges and clearing houses at its sole discretion, and customers “rank only as a general creditor” upon third-party default. Money transferred as margin is explicitly excluded from treatment as “Client Money.”

As to commingling, on January 16, 2026, Alberta transferred 40.001 BTC and 650,050 USDC to BlockFills; these assets were swept from the deposit wallet within minutes and the wallet was empty within 1.5 hours. On February 11, 2026, the Debtors’ representatives disclosed to clients that digital assets were “not segregated per client,” “not segregated on separate wallets per customer,” and were commingled into “one balance sheet.”

Cryptocurrency Bankruptcy Precedent

The Debtors also note a procedural deficiency: the objectors have not filed an adversary proceeding as required by Federal Rule of Bankruptcy Procedure 7001(b) for determination of property of the estate, and have not attempted tracing of specific funds.

Practical Implications

If customer digital assets are determined to be estate property, they are available to fund the reorganization, to be distributed pro rata under the Plan, and to serve as the basis for the cash collateral arrangement. If some or all customer deposits are excluded from the estate, the Debtors’ asset base shrinks, potentially undermining the viability of both the NewCo Transaction and the Alternative Transaction, significantly reducing the equity cushion, and accelerating the Trigger Event threshold under the Second Interim Cash Collateral Order.

The Joint Chapter 11 Plan establishes a dual-track “toggle” mechanism at the heart of the restructuring. The Plan contemplates two mutually exclusive consummation paths, and the Debtors may elect between them without re-solicitation of votes—providing maximum flexibility and preserving value by maintaining competitive tension throughout the process.

NewCo Transaction

Led by the Ad Hoc Group of BlockFills’ largest customers, this path involves the formation of a new operating entity (“NewCo”) that would acquire BlockFills’ operating assets free and clear via the Plan or Section 363 sale. Participating customers would contribute their pro rata distributions back to NewCo in exchange for equity interests. Non-acquired assets would vest in the GUC Trust.

Alternative Transaction

A sale of all or substantially all of the Debtors’ assets pursuant to the Bidding Procedures, any combination of sales, and/or a liquidation and wind-down. The Bidding Procedures contemplate credit bidding under Section 363(k) and a sale free and clear of liens, claims, and encumbrances under Section 363(f).

The Plan classifies claims and interests into eleven classes. Classes 1 through 4 are unimpaired and deemed to accept. Classes 5, 6, and 7 are impaired and entitled to vote. Classes 8 through 11 are either impaired and deemed to reject or presumed to accept.

Recovery projections as filed leave all dollar amounts and percentages blank, with the notation that they “are to be populated prior to the Disclosure Statement approval hearing.” Administrative Claims, Professional Fee Claims, and Priority Tax Claims are unclassified but receive full payment.

Cryptocurrency Distribution Mechanics

Claims asserted in cryptocurrency are valued in USD as of 4:00 p.m. Central Time on the Petition Date. Prior to the Effective Date, the Debtors are authorized to rebalance the cryptocurrency portfolio for pro rata in-kind distributions. Creditors receive cryptocurrency in the same form(s) as their claim, to the extent possible; if the Debtors cannot transact in the relevant cryptocurrency, the distribution is made in cash. This valuation approach fixes the claim amount at petition-date values, carrying significant implications in a volatile cryptocurrency market.

The Plan’s release provisions are among its most consequential and nuanced features.

Conditional Releases

Both debtor and third-party releases are expressly conditioned on the outcome of the Special Committee investigation into certain historical transactions and conduct. This conditioning mechanism means that the final scope of released claims cannot be determined until the investigation concludes, and creates the possibility that the investigation’s findings could narrow or expand the universe of protected parties. Third-party releases are implemented through an opt-out mechanism and do not apply to actual fraud, willful misconduct, or gross negligence.

GUC Trust

The GUC Trust is established on the Effective Date regardless of which transaction path is elected. It serves as a liquidation and distribution vehicle—not an operating entity—for the benefit of holders of Allowed Claims in Classes 5 and 7. The GUC Trust is intended to qualify as a “grantor trust” and is governed by a GUC Trust Oversight Committee with a minimum of three members selected by the Committee. Vested Causes of Action vest in the GUC Trust under Section 1123(b)(3)(B), with broad preservation language protecting the Trust’s ability to pursue avoidance actions and preference claims. Unclaimed distributions not accepted within 180 days after the Effective Date revert to the GUC Trust after one year.

Causes of Action Preservation

The Plan provides that no preclusion doctrine applies post-Confirmation or Consummation, and no entity may rely on the absence of a specific reference in Plan documents as an indication that a cause of action will not be pursued. This broad preservation language is designed to protect the GUC Trust’s ability to pursue avoidance actions, preference claims, and other litigation for the benefit of unsecured creditors.

The case proceeds on a compressed schedule designed to preserve the dual-track toggle mechanism. The following dates represent the critical milestones between now and confirmation.

Customers (~$145M in Unsecured Claims)

Customers are the dominant creditor constituency. The Plan’s dual-track structure recognizes their pivotal role: under the NewCo Transaction, participating customers effectively become equity owners of the reorganized business. The Convenience Class consists of approximately 807 customers with claims below $45,000, who would receive payment from a $850,000 pool. The Ad Hoc Group of the largest customers negotiated the Term Sheet and drives the NewCo Transaction path. However, the property-of-the-estate dispute introduces significant uncertainty—if deposits are found not to be estate property, those customers may recover outside the plan process.

Celsius Network Ltd. (~$4.8M Secured Claim)

Celsius is the only identified secured creditor. Its claim is treated as unimpaired (Class 4), but the Debtors’ challenge to lien perfection creates litigation risk. If the liens are invalidated, Celsius would hold a general unsecured claim of approximately $4.8 million against total unsecured debt of approximately $145 million. Celsius retains credit bidding rights under the Bidding Procedures.

Official Committee of Unsecured Creditors

The seven-member Committee, represented by Morris James LLP, plays a critical role in overseeing the GUC Trust structure, negotiating plan terms, and participating in the cash collateral governance framework. Dominion Capital LLC is both a Committee member and a plaintiff in one of the prepetition customer actions, underscoring the tension between the interests of individual litigating customers and the collective interests of the creditor body.

Management and Insiders

The Special Committee Investigation creates significant uncertainty for current and former management. The conditioning of releases on the investigation’s outcome means that insiders cannot rely on Plan releases until the investigation concludes. The Plan’s waiver of employee restrictive covenants on the Effective Date may facilitate the departure of key personnel or their re-engagement by NewCo.

Existing Equity Holders

Series A investors (approximately $36 million in capital) and Pre-Series A investors (approximately $7 million) face complete loss of their investment. Existing Equity Interests are impaired and deemed to reject the Plan. No recovery is projected for equity holders.

Several interconnected issues will determine the trajectory and outcome of these cases over the coming weeks.

Property of the Estate Determination

The resolution of whether customer-deposited digital assets are estate property remains the foundational issue. If the Court ultimately determines that some customer deposits are not estate property, the consequences cascade throughout the case: the Debtors’ asset base and equity cushion shrink; the available pool for distribution to other creditors decreases; the NewCo Transaction may become less attractive if the asset base is uncertain; and the Trigger Event threshold could be reached more quickly, constraining operations.

Celsius Lien Perfection Challenge

The Debtors’ assertion that Celsius’s liens on certain assets may not have been properly perfected is a significant leverage point. If the liens are unperfected, Celsius’s claim could be reclassified as general unsecured, improving recoveries for other unsecured creditors and eliminating the adequate protection requirement for cash collateral use. This challenge remains unresolved.

Dual-Track Toggle Scrutiny

The absence of a re-solicitation requirement in the event of a toggle between the NewCo Transaction and the Alternative Transaction is a significant efficiency, but may attract scrutiny from parties who argue that the two paths produce materially different outcomes for creditors.

Cryptocurrency Valuation and Market Risk

Fixing cryptocurrency claim values at petition-date levels carries significant implications in a volatile market. If values appreciate post-petition, the estate benefits; if they decline, the estate bears the loss. The authorization to rebalance the cryptocurrency portfolio introduces additional complexity and potential for disputes about whether rebalancing decisions were made in good faith.

Special Committee Investigation Findings

The investigation’s conclusions will directly affect the scope of releases available under the Plan. If the investigation reveals conduct that would narrow or eliminate releases, the affected parties may contest confirmation, potentially altering the timeline and structure of the case.