FTX files consensus-based restructuring, awaiting bankruptcy court approval
The expected updated plan of reorganization from FTX Trading and its affiliates was filed today.
FTX exchange shared a customer and creditor compensation scheme. Though still awaiting bankruptcy court approval, the strategy might boost sector liquidity.
FTX submitted a consensus-based reorganization plan over two years (almost 17 months) after filing for Chapter 11 Bankruptcy in the District of Delaware.
Thanking all stakeholders and promising to “return 100% of bankruptcy claim amounts plus interest for non-governmental creditors,” FTX CEO and CRO John J. Ray III said:
We, the independent Board of Directors of FTX, send our sincerest gratitude.Finally, I appreciate FTX consumers and creditors' patience during this process.
The concept has two main benefits for clients and creditors:
“98% of FTX creditors to receive 118% of allowed claims in cash within 60 days of effectiveness.
Other creditors to get 100% of allowable claims plus billions for investment time value.”
Government and commercial partners would settle conflicts without expensive and lengthy litigation under the concept.
The plan describes how the exchange would divide “virtually all of the assets associated with FTX at the time of its collapse in November 2022” to clients and creditors, pending Bankruptcy Court approval. No matter the asset price, they will be paid at 2022 crypto values.
Assets controlled by the Joint Official Liquidators of FTX Digital Markets, Ltd. (Bahamas), the Securities Commission of The Bahamas, FTX Australia, the US Department of Justice, and dozens of private parties that assisted in recovery.
Bloomberg reports that FTX has billions more than it needs to compensate clients for a November 2022 collapse. This allows the corporation to recover fully in bankruptcy.
Creditor payments would boost crypto prices by increasing market liquidity.
FTX coin FTT increased approximately 25% to $2.06 following this announcement.
