Cosmos-based blockchain protocol Terra announced that the bankruptcy court has issued an order in TFL’s Chapter 11 case, permitting TFL to reopen the Shuttle bridge for redeeming wrapped assets on Terra Classic. Additionally, the court has authorized TFL to undelegate and burn the 150 million LUNA tokens received from the Terra Community Grant.
According to an announcement on the social media platform X, TFL plans to transfer all assets from the Shuttle bridge wallets to new, more secure wallets under the court order. Additionally, a new, simplified Shuttle bridge interface will be made available, allowing users to redeem wrapped assets from the bridge wallets for up to 30 days after TFL’s Chapter 11 plan becomes effective.
After this period, TFL will permanently close the Shuttle bridge and any remaining assets will be burned. However, the court has not yet approved TFL’s proposed Chapter 11 plan, which is not expected to take effect until at least late September 2024.
1/ Dear Terra community,
We would like to inform you about a recent bankruptcy court order in TFL’s chapter 11 case authorizing TFL to do the following: 1) Reopen the Shuttle bridge for the redemption of wrapped assets on Terra Classic; 2) Undelegate & burn the 150M LUNA…
— Terra 
Powered by LUNA 
(@terra_money) July 19, 2024
Terra To Begin Undelegation Of 125M LUNA Tokens Staked In Validators
Furthermore, under the bankruptcy court order and in accordance with the settlement between TFL and the Securities and Exchange Commission (SEC), TFL will initiate the undelegation process for the 125 million LUNA tokens currently staked with 49 validators recommended by the Terra Delegation Committee. After the undelegation is complete, both the 125 million LUNA tokens used for delegations and the 25 million LUNA allocated for liquidity provisioning will be burned.
Terra stated that users do not need to take any action at this time. The company will provide instructions on the steps previous users of the Shuttle bridge should follow in the future.
Founded in 2018, Terraform Labs is an open-source software development company focused on blockchain technology. The company previously developed the algorithmic stablecoin TerraUSD and the cryptocurrency Luna, both of which experienced a collapse in 2022.
Terraform Labs filed for Chapter 11 bankruptcy with the Bankruptcy Court for the District of Delaware earlier this year. This filing allows the company to maintain operational continuity during the proceedings. In May, Terraform Labs and its co-founder, Do Kwon, reached a “settlement in principle” with the SEC.
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