According to Bloomberg, a group of investment companies has been purchasing the debts of FTX customers since the cryptocurrency exchange went bankrupt at the end of 2022. These companies include the British distressed debt investment firm Attestor Limited, Baupost Group, Farallon Capital, and Oaktree Capital.
An FTX lawyer stated at a recent court hearing that FTX is in the process of fully repaying its debts to the creditors as planned. This means that investors who purchased the debts at only 10% of their face value after the exchange collapsed will be able to claim the full amount.
Documents submitted to the court at the time showed that Attestor Limited held approximately $394 million in FTX debts at the end of January, making it the largest holder of distressed debts among several. According to pricing data from broker Cherokee Acquisition, Attestor has been buying FTX debts since at least March 2023, at a price of around 20% of face value.
Source:
Bloomberg
According to reports, many funds have been investing through entities with different names, and insiders have confirmed their identities. Spokespersons for Attestor, Farallon, Oaktree, and Baupost declined to comment.
In bankruptcies worth billions of dollars, typical unsecured creditors either choose to wait for years to receive repayment or try to sell their debts to investors specialized in extracting value from bankrupt companies. Regardless of the approach, creditors usually recover far less than the amount owed to them. However, according to advisors handling the bankruptcy case of FTX, the company is one of the few exceptions where small creditors can expect to fully recover their debts.
Related report: “Rumors suggest FTX restructuring team may pay interest on debts, with a recovery rate expected to exceed 100%.”
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