FTX Proposes Restructuring Plan, 98% Creditors to Receive 118% Claim Settlement within 60 Days

FTX Proposes Restructuring Plan, 98% Creditors to Receive 118% Claim Settlement within 60 Days

FTX Proposes Restructuring Plan, 98% Creditors to Receive 118% Claim Settlement within 60 Days

Cryptocurrency exchange FTX announced on Tuesday (7th) that it has submitted a revised restructuring plan and disclosure report to the court. According to the plan, 98% of the creditors will receive at least 118% of their recognized claims in cash within 60 days after the plan takes effect, while other creditors will receive full repayment of their principal and compensation for the time value of their billions of dollars in investments.

FTX CEO John J. Ray III stated in a press release that creditors with recognized claims below $50,000 will be eligible to receive approximately 118% of their claim amount after court approval, with repayment to be made within 60 days after the plan takes effect.

The latest restructuring plan aims to provide “centralized distribution” for FTX customers and creditors affected by the company’s bankruptcy in 2022, regardless of where their assets are located. FTX estimates that the total amount of cash available for distribution is between $14.5 billion and $16.3 billion, pending final determination and approval by the U.S. Bankruptcy Court.

According to Bloomberg, FTX owes customers and other non-government creditors approximately $11 billion. Court documents show that while all debts will be fully repaid with interest, equity holders will not receive any remaining funds.

Earlier this year, FTX had approximately $6.4 billion in cash available for repayment, with the main reason for the increase in funds being the widespread increase in the prices of various cryptocurrencies, including the token SOL supported by FTX founder Sam Bankman-Fried, who has been convicted. In its press release, FTX noted that it monetized a highly diverse range of assets, most of which came from investments or litigation claims held by Alameda Research and FTX Venture, including shares of artificial intelligence company Anthropic.

The details of the proposal for distributing cash to creditors and concluding the bankruptcy protection case were outlined in a document submitted by FTX’s restructuring advisors on Tuesday. The document, called a disclosure report, aims to assist creditors in voting on the proposed repayment plan. The results of the vote will be taken into consideration by U.S. Bankruptcy Court Judge John Dorsey when deciding whether to approve the restructuring plan later this summer. A hearing on the disclosure report and voting procedures is scheduled for the end of June.

References: FTX Press Release, The Block, Bloomberg