FTX Creditors Frustrated With Exchange’s Exit Plan To Get Out Of Bankruptcy

Key Points:

• The FTX Creditors Committee said it was highly disappointed with the company’s restructuring plan because it would become the most expensive bankruptcy in history and increase delays.
• Despite repeated promises to discuss Chapter 11 bankruptcy, FTX failed to deliver.
• FTX’s restructuring plan places confidence in the recovery of overseas branches.

According to Cointelegraph, FTX creditors said they were “deeply disappointed” by the exchange’s draft bankruptcy exit plan and claimed the plan was ignored by FTX’s restructuring team.

In a July 31 court filing, the FTX’s Official Committee on Unsecured Creditors (UCC) said that despite repeated requests and promises from the group, they “did not call or meeting” with FTX to discuss its draft Chapter 11 plan.

On August 1, FTX creditors tweeted that FTX had submitted a restructuring plan. Primary information includes: 1. All non-customer claims (such as the IRS) will be included as secondary; 2. Zero FTT claim amount 3. Foreign exchange will restart to make up for the customer gap.

The proposed FTX restructuring plan indicates that in addition to establishing a “foreign exchange company,” the current FTX team is also considering the creation of a new trust company called “FTX Ventures Trust”.

The trust will hold FTX’s investments in private startups as well as digital tokens that FTX does not plan to sell shortly after exiting bankruptcy. The trust’s purpose is to manage these long-term investments and distribute cash from them over time.

FTX has yet to decide whether the trust will be owned by FTX’s bankruptcy assets or be traded separately after the bankruptcy. The goal is to find a way to maximize the value of these illiquid investments that FTX administrators cannot easily sell after bankruptcy.

In addition, the current CEO of FTX, John J. Ray III, stated that FTX hopes to revise the plan with creditors’ cooperation by the third quarter of 2023 and filed a disclosure statement in Q4.

Currently, FTX’s restructuring plan is still in its infancy, the team will submit a revised plan and release a statement in Q4 2023 based on feedback from creditors, to reach consensus and get out of bankruptcy.

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