The post FTX Faces Legal Scrutiny Over Reorganization Plan appeared on BitcoinEthereumNews.com.

FTX’s reorganization plan is under scrutiny as it faces several challenges ahead of its confirmation hearing in October. On August 23, Andrew R. Vara, the US Trustee overseeing the FTX bankruptcy case, filed an objection to the plan, citing ten major concerns. US Trustee and Creditors Challenge FTX’s Reorganization Plan Vara’s primary issue is the legal immunity granted to certain entities involved in the bankruptcy. He argues that the plan provides excessive legal protection to the estate’s administrators and advisers, far exceeding what is typically offered under relevant statutes. He highlighted that such immunity is unwarranted for professionals whose employment and compensation are already subject to court approval and oversight. “Pragmatically, such immunity would negate the exceptions for gross negligence, willful misconduct, and fraud. Further, such immunity would far exceed the protections that estate professionals whose employment and compensation are subject to Court approval,” Vara added. Read more: Who Is John J. Ray III, FTX’s New CEO? Vara also criticized the plan’s unequal treatment of creditors. He noted that the top 2% of creditors could receive up to 143% of their claims. On the other hand, the remaining 98% would receive only up to 119%. This disparity, according to Vara, raises concerns about fairness. “The Debtors will not have business operations going forward, [so] reserving the Supplemental Remission Fund for the largest 2% of customers by number does not have a business-related justification,” Vara said. Additionally, the US Trustee objected to including costs related to last year’s Kroll data breach in the plan. According to him, these costs should not burden the debtor’s estates. Further, he pointed out that estate professionals have already sought millions in compensation for addressing the breach. “The Plan should be revised to specify that nothing in the Plan is releasing any claims or causes of action…

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Filed under: News - @ August 25, 2024 10:18 pm