FTX Reaches Proposed Settlement with Creditors for Customer Property Disputes
Bankrupt cryptocurrency exchange FTX has reached a proposed settlement with key creditors to resolve customer property disputes. The exchange aims to confirm an amended payout plan in the second quarter of next year. The settlement, known as the “Customer Shortfall Settlement,” was reached among FTX debtors, the ad hoc committee of non-U.S. customers, the official committee of unsecured creditors, and putative class representatives.
The CEO and chief restructuring officer of FTX, John J. Ray III, called the proposed settlement a major milestone in the case and highlighted the value created for customers. The settlement is part of an amended reorganization plan that will be filed by December 16. If approved by the bankruptcy court, it will create a special “Shortfall Claim” to settle customer preference exposure at an agreed amount.
Shortfall Claim and Estimated Amounts
The shortfall claim is estimated to be around $8.9 billion for FTX.com and $166 million for FTX US. According to FTX, customers of both exchanges would collectively receive over 90% of distributable value worldwide if the amended plan incorporating the Customer Shortfall Settlement is approved by the end of the second quarter of 2024. However, FTX anticipates that customers will not be paid in full, with greater percentage losses for customers of FTX.com.
The official committee of unsecured creditors acknowledged that the amended plan will help speed up creditor and customer recoveries but emphasized that there is still significant work to be done.
Hot Take: FTX Makes Progress Towards Resolving Customer Property Disputes
Bankrupt crypto exchange FTX has taken a step forward in resolving its customer property disputes by reaching a proposed settlement with key creditors. The settlement, known as the “Customer Shortfall Settlement,” is part of an amended reorganization plan that aims to provide an agreed amount to eligible customers for settling customer preference exposure. While customers of FTX.com and FTX US may not be paid in full, the estimated distributable value worldwide suggests that they would collectively receive over 90% of the value. This proposed settlement marks a significant milestone in the case, but there is still more work to be done to finalize the plan and ensure creditor and customer recoveries.
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