The Ad Hoc Committee of Non-US Customers Reaches Settlement Agreement
The Ad Hoc Committee of Non-US Customers of FTX.com has successfully reached a Settlement and Plan Support Agreement (PSA) with the U.S. Bankruptcy Court in Delaware. This agreement, achieved through extensive negotiations, establishes a framework for a consensus-based reorganization plan.
Positive Results from the PSA
The Ad Hoc Committee initially pursued litigation in March, asserting that property held on or misappropriated from FTX.com belongs to customers rather than FTX Debtors. Recognizing that the litigation process could be time-consuming and costly, the Committee decided to resolve the dispute with a plan framework that could result in a 90% distribution of value to FTX.com customers. The recently announced PSA has yielded positive results and struck a balance between the parties involved.
In addition, eligible customers have the opportunity to participate in the “Preference Settlement” by reducing their claims or paying 15% of their net preference exposure. However, the execution of the PSA and its associated procedures still depend on the approval of creditors and the Bankruptcy Court.
Litigation and Liquidity Crisis
In November 2022, FTX faced a liquidity crisis, leading to discussions about potential acquisition by Binance. The collapse of FTX and the actions of its founder, Sam Bankman-Fried, are now subject to an ongoing trial.
Hot Take: The Path Towards Resolution for FTX.com Customers
The successful execution of the Settlement and Plan Support Agreement (PSA) marks an important step forward for non-US customers of FTX.com. By reaching a consensus-based reorganization plan, this agreement offers hope for a fair distribution of value to affected customers. While litigation may have been a lengthy and expensive process, the decision to resolve the dispute through the PSA reflects a pragmatic approach that prioritizes customer interests. Eligible customers now have the opportunity to participate in the Preference Settlement, potentially mitigating their preference liability. However, it is crucial for the PSA and associated procedures to gain approval from creditors and the Bankruptcy Court. Overall, this development brings optimism and a clearer path towards resolution for FTX.com customers.
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