FTX Unveils Bold Reorganization Plan for Creditor Compensation and Recovery
FTX has outlined its intentions to provide significant returns to its creditors, with a plan unveiled on Tuesday indicating that 98% of them will receive no less than 118% of their allowed claims.
Additionally, certain creditors are slated to receive full repayment along with substantial compensation reflecting the time value of their investments.
FTX CEO John J. Ray III expressed satisfaction with the proposal, highlighting the aim to fully reimburse non-governmental creditors, including interest on their claims.
The reorganization plan targets a streamlined approach to distributing assets to both FTX customers and creditors impacted by the company’s collapse in 2022, irrespective of the location of their assets. While the plan’s specifics are pending finalization and approval from the U.S. Bankruptcy Court, FTX estimates a cash pool ranging between $14.5 billion and $16.3 billion will be available for distribution.
According to the proposed plan, creditors with claims under $50,000 will qualify for the 118% compensation upon court approval, with repayment anticipated within 60 days of the plan’s effective date.
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FTX noted the monetization of a diverse array of assets, primarily stemming from investments held by Alameda and FTX Venture businesses, as well as litigation claims. Due to FTX’s limited holdings of bitcoin and ether at the time of its collapse, creditors did not benefit from the subsequent surge in the value of these cryptocurrencies.
The downfall of FTX was attributed to illicit activities conducted by its executives, resulting in a liquidity crisis and eventual collapse. Former CEO Sam Bankman-Fried was convicted last November on seven counts of defrauding FTX customers and investors and was sentenced to nearly 25 years in prison in March.
Alexander Stefanov
Reporter at CoinsPress
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