Terraform Labs Announces September 19 Bankruptcy Hearing Amid Token Burn Plans

Terraform Labs Announces September 19 Bankruptcy Hearing Amid Token Burn Plans

Terraform Labs (TFL), the company responsible for the Terra ecosystem, made a significant announcement regarding its Chapter 11 bankruptcy proceedings on Wednesday. TFL confirmed that the Chapter 11 bankruptcy hearing is set to begin in mid-September.

Terra Bankruptcy Hearing Scheduled for September 19

On August 21, Terra announced on X (formerly Twitter) that the Plan Confirmation Hearing for the Chapter 11 bankruptcy cases involving Terraform Labs Pte Ltd (TFL) and Terraform Labs Limited (TLL) will take place on September 19 at 10:00 AM ET.

This hearing represents a critical milestone in Terraform Labs’ bankruptcy reorganization plan. Additionally, August 21 marks the deadline for creditors to submit their Preliminary Crypto Loss Proof of Claim forms, an essential step for those wishing to vote on the proposed Chapter 11 Plan.

Terraform Labs initially filed for Chapter 11 bankruptcy in January and reached a $4.47 billion settlement with the U.S. Securities and Exchange Commission (SEC) in June.

The Bankruptcy Court for the District of Delaware recently approved the plan proposed by TFL. As part of this plan, Terra intends to reopen the Shuttle bridge, allowing for the redemption of wrapped assets on Terra Classic. The company also plans to burn LUNA ecosystem tokens held in TFL and Luna Foundation Guard (LFG) wallets.

Users will have a 30-day window to redeem wrapped assets from the bridge wallets. Any unclaimed crypto assets after this period will be burned.

Potential Impact on LUNC and LUNA Prices

The prices of LUNA and LUNC are anticipated to recover as the firm proceeds with burning tokens in the Terra and LFG wallets. This development has led crypto exchanges like eToro and Gemini to delist the affected cryptocurrencies. In response, investors are withdrawing tokens from exchanges and opting to stake them instead.

LUNA price jumped 2% momentarily after the announcement, with the price currently up 0.50% at $0.3289. The 24-hour low and high are $0.3214 and $0.3392, respectively. Moreover, trading volume has increased by 17%, indicating interest among traders.

Meanwhile, LUNC price climbed 2% to $0.000082 from a 24-hour low of $0.000077. The 24-hour trading volumes saw 38% increase as traders reshuffle positions amid broader crypto market selloff.