Post By: CryptosHeadlines.com
FTX Debtors believe that with approval from the bankruptcy court, customers will receive more than 90% of their total value by the second quarter of 2024.
FTX Debtors made an announcement in a filing on Monday, October 16, regarding the resolution of customer property disputes within their ongoing Chapter 11 cases. This resolution will be included in the Amended Plan of Reorganization, which FTX intends to submit by December 2023.
Pending approval from the Bankruptcy Court, the revised plan aims to ensure that customers worldwide will receive more than 90% of the value that can be distributed. The purpose of this customer shortfall settlement is to address the customer property disputes brought against the FTX Debtors and to support the confirmation of the amended plan by the second quarter of 2024.
The initial customer property lawsuit argued that users of FTX.com and FTX US had specific property rights in certain assets, rather than being in the same category as general creditors with unsecured claims. The Customer Shortfall Settlement resolves this dispute by giving customers an unsecured claim against the FTX Debtors, with equitable priority over certain segregated or acquired assets.
According to @spreekaway, the Debtors have proposed a settlement option. If you’ve made net withdrawals within the nine days before the bankruptcy filing date, you can choose to reimburse 15% of those withdrawals. If your net withdrawals during this period exceed $250,000, paying the 15% will prevent any legal action against you. However, if your net withdrawals in the last nine days amount to less than $250,000, they won’t pursue legal action against you.
FTX’s Revised Plan in Detail
The Amended Plan closely resembles the Draft Plan that was initially proposed by the FTX Debtors for discussion on July 1, 2023. Here are the key points of the Amended Plan:
1. FTX Debtors would organize their assets into three main categories:
Assets dedicated to benefiting FTX.com customers.
Assets reserved for FTX US customers.
A “General Pool” containing other assets.
2. Customers using FTX.com and FTX US would not only have a claim to the assets held at their respective exchanges but also a “Shortfall Claim” against the General Pool. This Shortfall Claim represents the estimated value of assets that are missing from their respective exchanges.
3. The projected Shortfall Claim is approximately $8.9 billion for FTX.com and $166 million for FTX US.
4. Out of the General Pool, 66% would be specifically allocated to settle Shortfall Claims. The remaining 34% would be used to settle any remaining Shortfall Claims and other claims in a proportional manner.
Resolution for Customer Shortfalls
FTX’s recent agreement to address customer shortfalls follows months of extensive negotiations by the FTX Debtors. They’ve been in discussions with various stakeholders to find common ground. FTX’s new management, led by John. J. Ray III, has been putting significant efforts into resolving issues with customers.
All of this is happening at the same time that SBF’s actions have been brought to light in the recent filing. These developments in the case shed light on how SBF used customer funds recklessly for celebrity promotions and deals. During his testimony on Monday, Nishad Singh, FTX’s former Head of Engineering, also admitted to engaging in unlawful activities with Sam Bankman-Fried.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
