FTX to Compensate Creditors Beyond Expectations

May 8, 2024

FTX, a former giant in the cryptocurrency exchange scene, and its affiliates have announced a remarkable plan to recompense creditors, surpassing initial expectations following their Chapter 11 bankruptcy filing in Delaware 17 months ago. This groundbreaking reorganization, subject to court approval, aims to distribute assets exceeding $14.5 billion to $16.3 billion, benefitting nearly all creditors worldwide.

FTX’s CEO and Chief Restructuring Officer, John J. Ray III, expressed profound gratitude to all stakeholders for their unwavering support throughout this intricate recovery process. He stated, “We are pleased to propose a Chapter 11 plan that contemplates the return of 100% of bankruptcy claim amounts plus interest for non-governmental creditors.”

The proposed plan showcases a significant uplift for creditors, with approximately 98% set to receive 118% of their allowed claims within 60 days of the plan’s effectuation. Remarkably, the remaining creditors will be compensated in full and even receive additional compensation reflecting the time value of their investments.

FTX has achieved this unprecedented recovery through diverse monetization strategies, leveraging assets from Alameda or FTX Ventures businesses and litigation claims. Despite the shortfall in Bitcoin and Ethereum holdings during the bankruptcy filing, FTX has successfully recuperated substantial value from other sources to honor creditor claims.

What makes this plan extraordinary is the meticulous consensual settlements with key stakeholders, ensuring a comprehensive resolution to claims and an equitable distribution of assets. John J. Ray III highlighted the pivotal role of governmental agencies, including the U.S. Department of Justice and the Securities Commission of The Bahamas, in facilitating this complex recovery.

The plan outlines various key settlements, including resolving substantial claims with the Internal Revenue Service through a cash payment and subordinated claim arrangement. Additionally, FTX proposes agreements with regulatory bodies like the Commodity Futures Trading Commission to prioritize creditor payments and contribute recoveries to a supplemental restitution fund.

As the plan awaits court approval, creditors and stakeholders eagerly anticipate a positive outcome that could reshape perceptions of post-bankruptcy asset recovery.

In the words of John J. Ray III, “We extend our deepest appreciation to all customers and creditors of FTX for their patience throughout this process.” This sentiment echoes a shared commitment to navigating complexities and emerging stronger from adversity. The proposed plan not only heralds a fresh start for FTX but also exemplifies a new standard in crypto asset management and recovery.

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