After several rounds of asset and token sales, the restructuring team of the bankrupt crypto exchange FTX announced that the accumulated funds are sufficient to fully compensate creditors and customers for their losses in the bankruptcy. Creditors can even receive additional compensation and will receive 118% cash repayment, which will be paid as early as September.
According to the FTX statement, once the sale of all assets is complete, the company will have as much as $14.5 billion to $16.3 billion in cash available for distribution. It owes customers and other non-government creditors about $11 billion.
At the same time, depending on the type of creditor's claim, some creditors can receive 142% of their loss compensation, and the vast majority of customers (creditors holding amounts below US$50,000) can receive approximately 118% of their loss compensation.
The plan contemplates full payment of the value of all non-government creditors’ claims as determined by the bankruptcy court. In addition, the plan contemplates a subordinate arrangement with government creditors that would allow for the payment of an interest rate of up to 9% (the consensus rate) to the major class of customers and creditors from the date of the bankruptcy filing until the effective date.
Certain creditors may also have the opportunity to receive additional compensation through the Supplemental Relief Fund described in Section 1.F of the Disclosure Statement.
The amount of compensation for creditors’ losses is calculated based on the platform funds on the day FTX exercised Chapter 11 of the Bankruptcy Law.
FTX CEO John Ray said this was an incredible outcome in any bankruptcy case, as creditors typically received only minimal compensation in past U.S. bankruptcy cases.
In a filing Tuesday, the restructuring team laid out new details for distributing cash to creditors and ending Chapter 11 of the bankruptcy code, with 98% of creditors set to be paid 118% of their losses within 60 days after the plan is approved by the court.
It is reported that U.S. Bankruptcy Judge John Dorsey plans to hold a hearing on the disclosure statement and voting procedures in late June.
This means that if everything goes well, creditors can start receiving compensation as early as September.
Although the crypto market is currently in a downward trend, after FTX’s rare announcement, FTX’s token FTT rose against the trend, rising from $1.5922 to a high of $2.27, an increase of more than 40% at one point, and then fell slightly to $2.14.
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