PANews reported on August 25 that according to The Block, a complaint filed by the US trustee overseeing FTX's bankruptcy lists ten flaws in the bankruptcy plan, including providing overly broad legal protections to entities involved in bankruptcy, unequal treatment of smaller creditors, and failure to provide exemptions for costs related to data breaches suffered in bankruptcy.
FTX Asset Management said most creditors agree with the plan. Crucially, Trustee Andrew R. Vara pointed to broad legal exemptions enjoyed by many bankruptcy-related personnel, unfair repayments of creditors based on size, and the bankruptcy asset management company's refusal to cover costs related to the data breach suffered by its service provider last year.
"Estate professionals have sought millions of dollars in damages in response to the Kroll data breach ... The debtor's estate should not be liable for this expense. The expense examiner also holds this view," Vara said in the filing.
Vara also disputes that the distribution plan treats creditors unequally based on claim size. âHerein, customers in the âconvenienceâ category ⊠will receive a smaller percentage distribution (119%) than other customers ⊠(up to 143%) simply because their claims are smaller (generally $50,000 or less),â Varaâs filing states. âThe Debtors will have sufficient cash on the Effective Date to pay the Convenience Claimants at the same rate as other customer claims ⊠The legal attributes of these customer claims do not differ materially.â
Vara also made some more technical legal arguments, but perhaps the most important was his objection to the âoverbroadâ immunity the plan would provide to FTX Estate managers and advisors, or condoning any wrongdoing. âSuch immunity would go far beyond the protection afforded to the employment and compensation of real estate professionals who are subject to court approval and oversight in the case [under the relevant statute],â Vara wrote.
