FTX Debtors have announced the settlement of customer property disputes as part of their pending Chapter 11 cases. The settlement will be included in the Amended Plan of Reorganization, which FTX plans to file by December 2023. Pending approval by the Bankruptcy Court, the amended plan aims to distribute over 90% of the value to customers worldwide. This settlement addresses the customer property dispute against FTX Debtors and supports the confirmation of the amended plan by Q2 2024.
The underlying litigation argued that users of FTX.com and FTX US had property rights in specific assets, rather than an unsecured claim. The Customer Shortfall Settlement resolves this dispute by granting customers an unsecured claim against FTX Debtors with priority over certain segregated or acquired assets.
FTX Debtors propose a settlement option where customers can reimburse 15% of their net withdrawals made within nine days of the bankruptcy filing. If net withdrawals exceed $250,000 during this period, customers can settle the 15% without facing legal action. However, if net withdrawals amount to less than $250,000, no legal action will be pursued.
Details of the Amended Plan include categorizing assets into three pools: assets for FTX.com customers, assets for FTX US customers, and a General Pool for other assets. Customers would possess a claim against their respective exchange’s assets and a “Shortfall Claim” against the General Pool for estimated missing assets. The projected Shortfall Claims are approximately $8.9 billion for FTX.com and $166 million for FTX US.
The recent customer shortfall settlement follows extensive negotiations by FTX Debtors and discussions with stakeholders. Under new management led by John J. Ray III, FTX has been actively working towards customer settlements while also exposing SBF’s reckless spending of customer funds on promotions and deals.
In conclusion, FTX Debtors have reached a customer shortfall settlement as part of their Chapter 11 cases. The proposed Amended Plan aims to distribute over 90% of the value to customers globally. The settlement resolves the dispute regarding customer property rights and grants customers an unsecured claim with priority over certain assets. Customers can settle 15% of net withdrawals made within nine days of the bankruptcy filing to avoid legal action. The Amended Plan categorizes assets into different pools, and customers have both a claim against their respective exchange’s assets and a “Shortfall Claim” for estimated missing assets. FTX has been actively working towards customer settlements under new management while exposing reckless spending by SBF.
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