FTX’s Comprehensive Repayment Plan Unveiled
Recently, FTX, a bankrupt cryptocurrency exchange, announced a revamped repayment strategy aimed at fully reimbursing creditors and customers, along with offering substantial compensation for the time value of their investments.
Customers Set to Receive Full Repayment
FTX shared in a press release on May 7 that it plans to repay 98% of its customers with at least 118% of allowed claims in cash. The insolvent exchange filed a new reorganization plan with the United States Bankruptcy Court of Delaware to outline this method.
- FTX to repay 98% of customers at least 118% of allowed claims in cash
- New reorganization strategy filed with the United States Bankruptcy Court of Delaware
As part of the plan, funds will be allocated to customers affected by FTX’s fraud scandal, with all assets from the time of collapse in November 2022 being distributed to creditors and customers centrally.
Billions Secured for Repayment
FTX has disclosed that it has obtained between $14.5 billion to $16.3 billion by selling off company assets and properties. This includes assets controlled by the Chapter 11 debtors and other private entities involved in the recovery process.
- FTX secures $14.5 billion to $16.3 billion for repayment
- Assets sold to fund repayment plan
The repayment strategy outlined by FTX aims to repay both governmental and non-governmental creditors in full, based on the value of their claims as determined by the Bankruptcy Court. A subordination arrangement is proposed for governmental creditors, prioritizing interest payments to both customers and creditors.
Repayment Plan Details
- FTX to make complete payments to non-governmental creditors based on claim values
- Governmental creditors to receive interest payments based on subordination arrangement
Additionally, a “convenience class” has been introduced for creditors with claims valued at $50,000 or less, streamlining the payment process for smaller creditors and expediting compensation. The finalized repayment strategy is pending approval from the Bankruptcy Court.
Key Settlements in Repayment Plan
Within the new repayment plan, FTX has disclosed several settlements agreed upon with primary stakeholders. Notably, a $24 billion claim filed by the Internal Revenue Service (IRS) has been resolved, with FTX agreeing to a $200 million cash payment and a $685 million subordinate claim.
- IRS claim resolved with $200 million cash payment and $685 million subordinate claim
- Proposed agreements with the IRS and CFTC to subordinate tax claims
FTX has also reached settlements with the Joint Official Liquidators of FTX Digital Markets, Ltd., and BlockFi, a major FTX creditor, further solidifying the repayment plan. These agreements are subject to finalization and court approval.
Hot Take: FTX’s Redemption Road
FTX’s latest repayment plan signifies a significant step towards redemption, aiming to fully repay creditors and customers while compensating them for the time value of their investments. With billions secured for repayment and key settlements finalized, FTX is on track to restore trust and rebuild post its bankruptcy ordeal.
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