Thomas Daniels
A U.S. judge has granted approval for FTX to poll its creditors on a proposed Chapter 11 repayment plan, paving the way for customers to vote on the multibillion-dollar initiative aimed at reimbursing individuals whose funds have been inaccessible since the exchange’s collapse.
Judge John Dorsey of the District of Delaware has authorized FTX advisers to solicit customer votes regarding their Chapter 11 plan. Should the plan receive approval, it will facilitate customer repayments and address government penalties stemming from the collapse of Sam Bankman-Fried’s cryptocurrency enterprise.
Repayment Details
Creditors play a significant role in influencing restructuring plans through Chapter 11 voting. Although key committees representing customer interests back FTX’s plan, there remains a vocal opposition demanding substantial modifications.
As reported by Bloomberg, the majority of FTX clients are projected to recover 119% of their holdings as of the company’s Chapter 11 filing in November 2022. Additionally, court documents indicate that other creditors might recoup up to 143% of their owed amounts.
FTX’s legal team maintains that bankruptcy laws permit repayments based solely on the asset values at the time of the bankruptcy filing in 2022, despite the subsequent increase in cryptocurrency prices. Consequently, the company plans to use the cryptocurrency prices from November 2022 as the basis for repayments. For instance, a customer with one Bitcoin (BTC) during the FTX collapse would receive a repayment valued at approximately $16,800, significantly less than Bitcoin’s current value of around $61,000.
Asset Recovery and IRS Payments
FTX asserts that it has recovered $16 billion in assets, including $12 billion in cash, sufficient to fully repay all customer claims based on the 2022 asset valuations. Furthermore, FTX will settle $200 million in priority claims with the Internal Revenue Service.
