An agreement has been reached between FTX creditors and debtors, with the potential to return more than 90% of assets to customers by the second quarter of 2024. FTX and FTX.US, both on the verge of bankruptcy, have taken a significant step towards resolving customer asset disputes.

An agreement has been reached between FTX creditors and debtors with the potential for more than 90% of assets to be returned to customers by the second quarter of 2024.

On Oct. 17, FTX debtors announced a “major milestone” in the Chapter 11 case following extensive discussions with various parties, including a committee of unsecured creditors, non-U.S. customers and class action plaintiffs, all related to customer ownership disputes.

An information-only notice of the proposed solution was filed with the Delaware-based U.S. bankruptcy court on October 16, while a formal application for court approval is expected to be filed by December 16.

At the heart of the amended plan is the “deficiency claim,” which estimates FTX.com and FTX.US customers will collectively receive about 90% of available assets.

The value of this claim is around $8.9 billion for FTX.com and $166 million for FTX.US.

These funds, pending approval, are expected to be distributed by the end of the second quarter of 2024.

FTX CEO and Chief Restructuring Officer John J. Ray III expressed satisfaction with the terms of the settlement, stating that this transforms what could have been a near-total loss for customers, especially given the challenging financial conditions.
The plan divides assets into three specifically designated pools for FTX.com customers, US customers and an overall pool of other assets.

However, only the first two groups are included in the deficiency claim, indicating that customers of both exchanges will not receive full payments and FTX.com customers will likely endure a higher percentage of losses.

One notable aspect of the proposed plan is for customers who withdraw over $250,000 from the exchange within nine days of bankruptcy.

These customers may receive a 15% discount on their requests. However, claims under $250,000 will not be affected.

FTX borrowers announced that eligible customers whose concession payment amount is less than $250,000 within the nine-day period will receive the payment without any claim reduction.

Additionally, as part of the amended plan, FTX may exclude insiders, affiliates and customers with knowledge of misuse of customer deposits and corporate funds from the deal.

Notably, former FTX CEO Sam Bankman-Fried is currently facing a fraud lawsuit linked to FTX's bankruptcy last November.

The outcome of this case may also affect ongoing bankruptcy proceedings.