FTX Debtors have revealed a plan to repay creditors up to 90% of their locked funds.
The plan if approved by the bankruptcy court will see repayments made in Q2 2024.

In a significant development, FTX Trading Ltd and its affiliated debtor, collectively known as FTX debtors have expressed optimism with a forward-looking projection that foresees customers reclaiming more than 90% of the deposits based on the approval of a bankruptcy plan. Should its projections work out, the repayment is set to be made by the second quarter of 2024. 

According to a release, the proposed settlement known as “customer shortfall settlement” is aimed at addressing the lingering customer property dispute within the context of their pending Chapter 11 bankruptcy case. 

Intricacies Surrounding the Settlement

This settlement which was reached among the FTX debtors, the executive committee of the ad hoc committee of non-U.S. customers, the official committee of unsecured creditors, and putative class representatives, is anticipated to be presented in conjunction with the Amended plan of reorganization by December 16, 2023.

According to insiders, the plan is designed to be robust and comprehensive, addressing the financial intricacies of the situation. If approved by the US bankruptcy court, it is expected to pave the way for a special shortfall claim for FTX customers, allowing them to recoup a significant portion of the global value involved. 

Notably, the shortfall claim is estimated to be approximately $8.9 billion for FTX.com and about $166 million for FTX.US. The significance of customers potentially reclaiming over 90% of the global value can not be overstated. It implies a successful resolution to what could have been a financially challenging situation.

The debtors’ optimism is rooted in the belief that the approved plan will effectively navigate the complexities of the bankruptcy process, ensuring a fair and equitable distribution of assets. 

In a post on X (formerly known as Twitter), the official committee of unsecured creditors said the amended plan will equally assist in speeding up the Chapter 11 case, as well as the timeline for creditor and customer recoveries. Although a lot of work still needs to be done, the committee still noted that they will do everything within their power to protect the interest of creditors and customers. 

Meanwhile, this positive projection may also signal a potential turning point for the exchange, showcasing resilience and a commitment to addressing financial challenges head-on. The anticipation of customers recovering a substantial portion of the global value is likely to instill confidence in the broader market and among shareholders, fostering a sense of stability and trust. 

Rebuilding the FTX Exchange 

Undoubtedly, the newly appointed management under the leadership of John Ray III is working to rebuild the fallen exchange. They have been planning to relaunch the international outfit of the crypto exchange, calling it FTX 2.0. As per reports, the defunct exchange has been seeking fresh investments from international investors, in order to get the platform up and running. 

Ray’s recent actions have been seen as positive by the crypto community, signaling potential progress in the venture. Recall that the bankrupt crypto exchange launched a “Claim Portal” for all its affected users. Interestingly, this is an effort from the new FTX management to allow all of its creditors to file official claims and recover their locked funds from the defunct crypto trading platform.

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Filed under: Bitcoin - @ October 17, 2023 12:18 pm