FTX’s Restructuring Plan Submitted: 98% Creditors to Receive 118% Claim within 60 Days of Effectiveness

FTX's Restructuring Plan Submitted: 98% Creditors to Receive 118% Claim within 60 Days of Effectiveness

FTX's Restructuring Plan Submitted: 98% Creditors to Receive 118% Claim within 60 Days of Effectiveness

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 creditors will receive at least 118% of their recognized debt in cash within 60 days after the plan takes effect, while other creditors will receive full repayment of principal and compensation for the time value of billions of dollars in investments.

John J. Ray III, CEO of FTX, stated in a press release that creditors with allowed claims below $50,000 will be eligible to receive approximately 118% of their debt amount after court approval, with repayment to occur 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 collapse in 2022, regardless of where their assets were at the time. FTX estimates that a total cash amount of between $14.5 billion and $16.3 billion is available for distribution, but the plan is still pending final determination and approval by the US 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 rise in prices of various cryptocurrencies, including the token SOL, which was previously heavily supported by convicted FTX founder Sam Bankman-Fried and is the native token of the Solana blockchain. FTX stated in its press release that it monetized a highly diverse range of assets, with most of them coming from investments or litigation claims held by Alameda Research and FTX Venture, including shares of artificial intelligence company Anthropic.

Details of the proposed distribution of cash to creditors and the termination of the bankruptcy protection case were outlined in a document submitted by FTX’s restructuring advisors on Tuesday, referred to as the disclosure report, which aims to assist creditors in voting on the proposed repayment plan. The voting results will be taken into consideration by Judge John Dorsey of the US bankruptcy court when deciding whether to approve the restructuring plan later this summer. A hearing for the disclosure report and voting process is scheduled for the end of June.

References:
FTX Press Release, The Block, Bloomberg