- Bankrupt crypto exchange FTX plans to pay over 100% of claims to some creditors, expecting to collect between $14.5 and $16.3 billion for distribution.
- Creditors with claims of $50K or less are set to receive approximately 118% of their allowed claims within 60 days after the effective date of the plan.
- FTX CEO, John J. Ray III, has expressed satisfaction at being able to propose a Chapter 11 plan that contemplates the return of 100% of bankruptcy claim amounts plus interest for non-governmental creditors.
FTX, a bankrupt cryptocurrency exchange, has proposed a plan to pay some creditors more than 100% of their claims, with a total collection expected to be between $14.5 and $16.3 billion. The move is seen as a step in the morally correct direction.
FTX’s Plan to Compensate Creditors
FTX’s plan, which is currently awaiting Bankruptcy Court approval, stipulates that creditors with claims of $50K or less will receive approximately 118% of their allowed claims within 60 days after the effective date of the plan. The Chief Structuring Officer and FTX CEO, John J. Ray III, reinforced the company’s intention to fully compensate creditors, stating, “We are pleased to be in a position to propose a Chapter 11 plan that contemplates the return of 100% of bankruptcy claim amounts plus interest for non-governmental creditors.”
FTX’s Fund Recovery and Plans
The compensation will be based on November 2022 discounted prices. For perspective, Bitcoin traded at $15K in November 2022, which is now about 300% up to the current $62K value. The defunct exchange estimated the total recovered funds could be between $14.5 billion and $16.3 billion. Most of the funds have been recovered from selling FTX’s crypto holdings like Solana, Avalanche, and Polygon. Additionally, the sale of a majority stake in AI startup Anthropic saw the defunct exchange scoop $884 million. If the court approves a consensus settlement with government entities, other creditors could receive additional payments in addition to the recovered funds.
Conclusion
FTX’s plan to pay some creditors more than 100% of their claims is seen as a step in the morally correct direction. However, it’s worth noting that FTX creditors would have been better off holding on to their assets. The plan is currently awaiting Bankruptcy Court approval, and if approved, it will set a precedent in the crypto industry.
