FTX’s bankruptcy plan offers over 100% recovery for creditors, faces mixed reactions News ▸ FTX ▸ Bankruptcy
FTX’s bankruptcy plan offers over 100% recovery for creditors, faces mixed reactions
FTX's new bankruptcy plan offers full recovery plus interest for non-governmental creditors while facing criticism over asset valuation and settlement terms.
2 min read
Updated: May. 8, 2024 at 9:39 am UTC
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The bankrupt FTX estate has unveiled a new reorganization plan that promises substantial returns to its creditors.
FTX creditors with claims below $50,000 would be eligible for a 118% recovery within 60 days of its approval by the Delaware bankruptcy court. Other non-governmental creditors would receive 100% of their claims plus up to 9% interest to account for the time value of their investments.
Meanwhile, provisions exist to settle claims with regulatory bodies such as the IRS and CFTC. The IRS is poised to receive approximately $200 million, while the CFTC’s settlement remains undisclosed.
FTX anticipates that the total value of assets collected and converted to cash for distribution will range between $14.5 and $16.3 billion. The firm achieved this recovery level by monetizing various assets, predominantly proprietary investments from Alameda or FTX Ventures businesses and litigation claims.
John J. Ray III, Chief Executive Officer and Chief Restructuring Officer of FTX, said:
“We are pleased to be in a position to propose a chapter 11 plan that contemplates the return of 100% of bankruptcy claim amounts plus interest for non-governmental creditors.”
Not all FTX creditors are satisfied
FTX creditors are expressing discontent with the proposed reorganization plan, highlighting their inability to recover stolen funds at current market rates.
Sunil Kavuri, a notable creditor, raised concerns about Sullivan & Cromwell’s inclusion of an Exculpation clause, shielding them from misconduct allegations such as selling FTX assets at substantial discounts.
Similarly, Mike Belshe, the CEO of BitGo, added:
“0% of FTX creditors agree that receiving $16800 for your Bitcoin is fully compensated. I understand why the bankruptcy process needs to work this way but let’s not pretend victims are getting their money back or that FTX wasn’t as awful as it was.”
However, Bloomberg ETF analyst James Seyffart supported the plan, lauding its moral trajectory despite acknowledging that the figures may not fully restore creditors’ losses. He said:
“Good good GOOD! The numbers won’t equate to FTX creditors just holding onto their assets. But allowing people to get more than 100% of their claim value from the time of bankruptcy is a move in the *Morally Correct* direction.”
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Posted In: FTX, Bankruptcy
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Oluwapelumi Adejumo
Oluwapelumi values Bitcoin's potential. He imparts insights on a range of topics like DeFi, hacks, mining and culture, underlining transformative power.
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Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network.
FTX
FTX is a defunct cryptocurrency exchange, currently in bankruptcy proceedings, that was founded by Sam Bankman-Fried and Zixiao “Gary” Wang in May 2019.
BitGo
BitGo is a market leader in institutional-grade cryptocurrency investment services, providing institutional investors with security, compliance, and custodial solutions for blockchain-based currencies.
Alameda Research
Alameda Research was once a principal trading firm, operating as an arm of the failed crypto exchange, FTX.
John J Ray III is the Chief Restructuring Officer and now-appointed CEO of FTX, a cryptocurrency derivatives exchange.
Mike Belshe is a co-founder and CEO at BıtGo, an institutional-grade digital asset financial services company, headquartered in Palo Alto, California that was founded in 2013.
James Seyffart is a well-regarded analyst at Bloomberg Intelligence, specializing in Exchange-Traded Funds (ETFs) and the broader fund industry.