98% of FTX creditors receive at least 118% of authorized claims in cash within 60 days of effective date
Other creditors received 100% of the allowable claim plus billions of dollars in compensation for the value of their time investment
The plan will resolve disputes with government and private stakeholders without the need for costly and protracted litigation
WILMINGTON, Del., May 7, 2024 /PRNewswire/ - 17 months after filing chapter 11 in the County of Delaware, FTX Trading Ltd. (d.b.a. FTX.com) and its affiliated debtors ("FTX" or the "Debtor") today filed their proposed Amended Plan of Reorganization (the "Plan") and Disclosure Statement attached ("Disclosure Statement") to the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"). Subject to completion and approval by the Bankruptcy Court, the Plan contemplates the centralized distribution to customers and other creditors throughout the world of virtually all of the assets related to FTX at the time of its collapse. falls in November 2022, regardless of where the assets are located at that time.
FTX forecasts that the total value of assets collected, converted to cash and available for distribution will range from $14.5 to $16.3 billion. This amount includes assets under the control of the chapter 11 debtors as well as assets under the control of the joint official liquidators of FTX Digital Markets, Ltd. (Bahamas), the Securities Commission of TheBahamas, FTX Australia's Joint Official Liquidators, the U.S. Department of Justice and dozens of private parties have collaborated on recovery efforts.
FTX has achieved this level of resilience by monetizing an extremely diverse collection of assets, most of which are proprietary investments held by Alameda businesses or FTX Ventures or claims litigation. As previously revealed, FTX.com had a major shortfall at the time of its chapter 11 filing in November 2022 – holding just 0.1% of Bitcoin and just 1.2% of Ethereum customers believed it held hold. Accordingly, debtors have not been able to benefit from the appreciation of these missing tokens in chapter 11 cases. Instead, debtors have had to look to other sources of recoverable value to repay creditors.
The plan contemplates full payment to all non-governmental creditors based on the value of their claims as determined by the Bankruptcy Court. In addition, the Plan contemplates a subordinated arrangement with sovereign creditors permitting interest payments to categories of customers and principal creditors at a rate of up to 9% (the "Consensus Rate") from commencement of chapter 11 cases to date of distribution. There may also be an opportunity for certain creditors to receive additional payments through the Supplemental Exemption Fund described in Part 1. F of the Disclosure Statement.
For creditors holding claims in allowable amounts of $50,000 or less, the Plan creates a special “facility layer.” As a result of this classification, if the Plan is approved by the Bankruptcy Court, the Debtors anticipate that 98% of FTX's creditors by number will receive approximately 118% of their allowable claims within 60 years. days after the effective date of the Plan, subject to your customer and distribution information requirements.
At the heart of the Plan is a series of agreements reached by consensus with key economic stakeholders. Major settlements (including those still subject to Court decision and approval) include:
Resolves $24 billion claims submitted by the Internal Revenue Service for periods prior to chapter 11 cases in exchange for a $200 million cash payment and $685 million ancillary claims will rank below the claims of all creditors and government entities.
A proposed settlement with the Internal Revenue Service as well as ancillary tax claims arising after the commencement of chapter 11 cases to pay creditors in full with interest at the Consensus Rate.
A proposed agreement with the Commodity Futures Trading Commission and other potential government claimants to both subordinate their claims to the full payment of non-government creditors with interest at the Consensus Rate and contribute any recovery in respect of these ancillary claims to a special fund created by the Debtor for the purpose of providing additional compensation to certain customers and certain creditors. The debtors have proposed that the Additional Exemption Fund be made available to all digital asset customers and lenders. Details of this arrangement are still being finalized.
A proposed agreement with the Department of Justice under which more than $1.2 billion of forfeiture proceeds, if the Department of Justice so decides, could be distributed to customers and creditors through cases Chapter 11 without increased administrative costs or delays.
The settlement of client assets was previously disclosed to the U.S. Special Committee. Customers, Class Action Claimants and the Official Committee of Unsecured Creditors, which provides for the permanent settlement of customer claims in exchange for a special treatment specifically for customers in the Plan.
The agreement was previously approved with the Joint Official Liquidators of FTX Digital Markets, Ltd. ("FTX DM"), allows FTX.com customers to elect to settle their claims in chapter 11 cases or liquidate FTX DM with a materially equivalent financial outcome.
The deal was previously approved with BlockFi, FTX's largest creditor.
Actor John J. Ray III, CEO and Chief Restructuring Officer of FTX, said: "We are pleased to propose a Chapter 11 plan that contemplates a 100% refund of the bankruptcy claim plus with interest to non-governmental creditors. On behalf of FTX's independent Board of Directors, I would like to extend my deepest gratitude to many government agencies, including the U.S. Department of Justice, the Exchange Commission. Commodity Futures, the Internal Revenue Service and the Bahamas Securities Commission, for their tireless efforts, cooperation and support through this complex recovery process. I also want to thank the joint formal liquidation of FTX Digital Markets, the Special Committee of Non-U.S. Customers, Class Action Complainants, BlockFi, the Official Committee of Unsecured Creditors and all experts. for their diligence in developing the Plan and its resulting achievements. Finally, I would like to thank all of FTX's customers and creditors for their patience throughout the process This."
Advisors
FTX debtors are represented by Sullivan & Cromwell LLP, Quinn Emanuel Urquhart & Sullivan LLP and Landis Rath & Cobb LLP as legal counsel and assisted by Alvarez & Marsal North America, LLC as general counsel. financial advisor and Perella Weinberg Partners LP as investment bankers, among other advisors.
Additional information
The Plan is subject to material conditions and risks, and all interested parties are required to review the Disclosure Statement carefully upon approval by the Bankruptcy Court. Bankruptcy Court filings, including the Plan and Disclosure Statement, and other documents related to the court proceedings are available at https://cases.ra.kroll.com/FTX/.