Some FTX users have received a "disturbing" email from Kroll, a bankruptcy settlement company in the United States. The content states that the debtor has decided that because the user holds an Impaired Claim, they will not receive any compensation distribution. .
FTX notifies Impaired Claim holders: No compensation?
(Chinese Translation) "You are receiving this email in connection with the joint Chapter 11 plan of reorganization of FTX Trading Ltd. and its debt subsidiaries (which may be modified, revised or supplemented from time to time, the "Plan"). The Debtor has determined that the claim held by you is not eligible for any distribution and is therefore deemed to have been rejected by the Plan without voting rights. You have the right to decide whether to participate in the third-party exemption. Please find below the information required to opt-in to the third-party exemption through Kroll's online portal:
Please enter your unique opt-in ID number at: https://restructuring.ra.kroll.com/FTX/EBallot-Home. Please note that Kroll’s electronic voting portal is expected to be available starting on July 10, 2024. "
What is an Impaired Claim? How will impaired creditors be affected?
In bankruptcy proceedings, an "Impaired Claim" refers to a bankruptcy plan in which creditors will not receive full repayment of their debts in full accordance with the terms of their original contracts. This means that the creditor's claim will be subject to some modification or reduction, such as a delay in payment, a reduction in principal or interest, or other similar adjustments to the terms.
Impaired creditors are usually required to vote on the plan before the bankruptcy court approves it. According to the Kroll timeline, the voting record date is 6/25 and ends on 8/16.
Specifically, Impaired Claim situations may include:
Principal Reduction: The creditor will receive less than the amount originally borrowed.
Extended repayment period: The repayment period is extended, meaning the creditor will receive payment over a longer period of time.
Reduced interest: The debt will be repaid at a lower interest rate.
Change other contract terms: for example, changing the frequency of payments or canceling certain payment obligations.
These changes are typically intended to help a bankrupt company reorganize its financial situation so that it can continue to operate to some extent or pay off some of its debts. In this case, the creditor needs to decide whether to accept new repayment terms or take other legal action.
FTX creditors are divided into two types: Impaired Claim / Unimpaired
The figure below illustrates that Unimpaired Claim is a creditor who will not be affected by the bankruptcy plan. They do not need to participate in voting and are deemed to have accepted the plan. However, Impaired Claim creditors are divided into three types: "with voting rights" and "without voting rights, deemed to reject the plan" and "without voting rights, deemed to have accepted the plan".
The FTX creditors who received this notice are the Impaired Claim creditors who have "no voting rights and are deemed to reject the plan", including categories 8A, 9, 11, 13, 14, 15, 16, 17, and 18.
9 Real estate companies generally make unsecured claims
11 Intercompany Interests
13 Section 510(b) Preferred Stock Claims
14 Section 510(b) Other Equity Claims
15 Equally subordinated claims
16 Other equity interests
17 FTT claims and entitlements
18 Minor Claims
What should I do if the claim is an Impaired Claim? Kroll: Some people can find Bahamas
General users who receive this Impaired Claim notification are more likely to receive the notification because of specific assets in their account. For example, holding other equity interests in Class 16, or holding FTT claims and interests in Class 17, or holding minor claims in Class 18 nanoscale assets.
For these creditors, Kroll recommends using a voluntary release (Voluntary Release by Holders of Claims); holders of Class 18 minor claims may be eligible for compensation at FTX Digital Markets Ltd., The Bahamas, and may be eligible for compensation on August 16, 2024 Submit proof of debt through the FTX DM website https://digitalmarketsclaim.pwc.com before the date.
Conclusion: It seems like there is no need to worry too much? Just some assets
Kroll said that if you have any questions about the restructuring plan, you can contact Kroll by email (ftxinfo@ra.kroll.com) and put "In re: FTX – Solicitation Inquiry" in the subject line.
In addition, it seems that the user who received this letter has one of the above categories of claims among his asset components, and this claim category cannot be compensated in the bankruptcy plan, such as equity and FTT. This does not mean that the overall assets cannot be obtained. compensation.
This article: Is FTX’s debt not reimbursable? What does it mean when I receive an Impaired Claim in my mailbox? Is there any chance that FTT will compensate? First appeared in Chain News ABMedia.
