The U.S. Bankruptcy Court has allowed cryptocurrency exchange FTX’s bankruptcy counsel to begin soliciting votes from creditors on its reorganization plan, The Block reported. At a bankruptcy hearing on Tuesday (25), the exchange’s lawyers and creditors debated this as some customers objected to FTX repaying the money in cash.
Judge John Dorsey must approve the reorganization plan and disclosure report, and creditors will then vote on the plan before a confirmation hearing, according to the report. Confirmation hearings are expected later this year.
FTX unveiled a revised restructuring plan in May and said it planned to repay at least 118% of admitted claims in cash to 98% of its creditors. Under the reorganization plan, creditors with allowed claims of less than $50,000 will be eligible to receive about 118% of the amount of their claims, subject to court approval. Last week, PwC, on behalf of FTX Digital Markets (FDM) and the official liquidator, shared an update on the liquidation process with creditors. The liquidator stated in the letter that creditors expected to recover an additional 19%~43%.
However, some groups, including those representing FTX's largest creditor group, opposed the plan and said the bankruptcy consortium should be repaid in cryptocurrency, rather than in dollars based on the value of the cryptocurrency at the time FTX filed for bankruptcy. .
Andrew Dietderich, a lawyer representing FTX in the bankruptcy proceedings, said the plan was "generally consensual" and told the hearing: "The relevant facts today are that none of the key stakeholders we have approached No objections were raised. Dietderich said they planned to seek a vote and said one of the purposes of the vote was to get feedback from creditors.
Meanwhile, David Adler, a lawyer representing three creditors, told the court the disclosure statement was "grossly inadequate" and he also disputed the creditors getting their money back in cash. Adler said:
"In the cryptocurrency cases that I've been involved in, the client usually has a strong desire to recover the cryptocurrency in physical form because if they don't get it back in physical form, that's a disposition event, or people think it could be a disposition event under U.S. tax law."
The lawyer also said creditors would face hefty tax bills if they get their money back in cash rather than in kind.
Judge Dorsey said the matter was a confirmation issue, meaning it could be raised at a later date. The next hearings are scheduled for July 17 and August 15.
This article FTX and creditors debate repayment options, judge allows vote on restructuring plan appeared first on Zombit.
