No Contact With Creditors?
Lawyers representing FTX’s creditors claim they were not informed about a proposed plan to revive the company’s international exchange. Creditors stated that the proposed restructuring plan is just an “idea” and no formal discussions have been held to put it into action. FTX’s lawyers were accused of not fulfilling their promise to provide a public roadmap for the bankruptcy proceedings and work with creditors on a successful reorganization plan. Creditors claim that the proposed plan only gives the illusion of progress and ignores their suggestions for restructuring.
FTX’s Plan and Specific Problems
FTX’s plan, released earlier, aims to divide the exchange’s creditors into distinct classes based on their affiliation with FTX US or the international exchange. Each class would receive a proportional share of each exchange’s asset pool. However, creditors raised concerns about how qualified parties would be selected to manage FTX after restructuring. They also want a say in the launch of a regulatory-compliant recovery token and fair compensation for those most affected by fraud. Creditors expressed disappointment in the significant legal fees incurred during the bankruptcy process despite initial instructions to be frugal.
Expensive and Skepticism
The bankruptcy cases involving FTX are projected to be among the most expensive in history, with an average of $50 million per month spent on professional fees since the exchange’s downfall. Creditors expressed dismay at the lack of engagement from FTX in discussing these issues and understanding their significance. Many investors, including Anthony Scaramucci, doubt the ability of FTX to successfully reboot and suggest that a complete rebranding may be necessary.
Hot Take
FTX’s failure to communicate and collaborate with creditors has raised doubts about the proposed plan to revive the international exchange. The lack of consideration for creditors’ suggestions and the mounting legal fees contribute to the skepticism surrounding FTX’s ability to recover effectively. FTX may need to undertake significant changes, potentially including a rebranding, to regain trust and ensure a successful turnaround.
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