FTX Reaches 95% Support in Restructuring Plan

Bankrupt exchange FTX is close to starting to refund its customers, as the exchange’s bankruptcy team and its creditors have indicated their preliminary agreement with the reorganization plan submitted to the U.S. Bankruptcy Court. This brings the conclusion of a case that has been going on for nearly two years.

According to a press release, FTX and its affiliated debtors received substantial support for the Plan of Reorganization. FTX submitted the plan to the United States Bankruptcy Court for the District of Delaware, which remanded it after suggesting some changes.

Initially, the plan had an unofficial vote among creditors where more than 95% of creditors voted in favor of the proposal. With this, the company’s creditors are optimistic about receiving their cryptocurrencies and cash soon.

Asset recovery and distribution

The reorganization plan calls for the distribution of nearly all assets related to the bankrupt cryptocurrency exchange. The date taken into account in the agreement is November 2022, the month in which the exchange declared bankruptcy.

However, users will receive their funds regardless of their location at the time of the company’s bankruptcy. In other words, the plan will benefit either FTX Global or FTX US customers. According to the bankruptcy team, the total amount of refunds paid will be between $14.5 billion and $16.3 billion.

This recovery involves assets owned by the company’s debtors and assets administered by various entities, such as the Joint Official Liquidators of FTX Digital Markets Ltd (Bahamas) and the Bahamas Securities and Exchange Commission.

In addition, the reorganization plan also provides for the payment of interest to the primary classes of customers and creditors at a rate of up to 9% from the commencement of the case through the date of distribution. There will be a confirmation hearing on the reorganization plan scheduled for October 7, 2024, where the final vote on the plan will take place.

FTX Reorganization Plan Nears Approval

In addition to the massive result in terms of the number of votes, the creditors who participated represent 99% of the claims by value. In other words, they are the ones who have the vast majority of the claims for funds to be received from FTX.

The result is practically a general consensus among all creditors, including those linked to FTX US. In this way, the possibility of approval of the agreement in an official vote increases.

John J. Ray III, CEO and Chief Restructuring Officer of FTX, expressed his optimism. According to the CEO, the result solidifies support for the reorganization plan.

The Plan provides for the possibility of paying 100% of bankruptcy proceeds and interest to non-government creditors. It also seeks to address several contentious issues with government and private counterparties, which would help avoid lengthy and costly legal battles and expedite the process of paying creditors.

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