The post US trustee and creditors object to FTX restructuring plan appeared on BitcoinEthereumNews.com.

Andrew Vara, the US trustee in the FTX bankruptcy case, has filed an objection to the FTX restructuring plan, citing ten flaws. His biggest concerns are that liquidators want creditors to bear the cost of last year’s data breach with FTX service provider Kroll and the unequal treatment of the creditors. The opposition could further delay the reorganization plan, which is already equally facing legal challenges from some creditors. Although FTX liquidators claim that most creditors have approved the plan, it remains to be seen if these new concerns will be enough to prevent court approval. Vara outlines 10 flaws in the FTX plan According to the US trustee filing, there are ten separate and independent reasons why the court must not confirm the restructuring plan. These include the plan contravening the Bankruptcy Code and several other rules by discharging the debtors from all liabilities and imposing third-party non-consensual releases on several entities. Additionally, the trustee questioned the broad exculpation (immunity) under the plan for FTX, the liquidators, and events advisors, who are not fiduciaries in the case. He claims that the broad immunity violates existing bankruptcy rules and, more importantly, does not provide an exemption for gross negligence and other violations. He wrote: “Such immunity would far exceed the protections that estate professionals whose employment and compensation are subject to Court approval and oversight [under the relevant statutes] receive during the case.” Vara particularly wants the court to remove any claims relating to the Kroll data breach from exculpation provisions. He noted that even if the court chooses to confirm the plan with other provisions allowing for release and immunity, there must be a provision in the plan that creditors can object to any professional fees relating to the breach. He said: “Estate professionals have sought allowance of millions…

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Filed under: News - @ August 25, 2024 2:16 pm