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News

FTX Creditors Can Receive Up To 142% Of Claim Amount With New Reorganization Plan

May 8, 2024 - Around 2 mins mins to read

Key Points:

  • FTX proposes a $14.5 to $16.3 billion payout for creditors and customers, signaling a major recovery from bankruptcy.
  • FTX creditors may receive up to 142% of their claims, while most customers could get back 118% of their balances.
  • Asset monetization and crypto price surges drive FTX’s turnaround, offering hope for a favorable resolution.
According to Reuters, crypto exchange FTX has unveiled an amended reorganization plan in a U.S. bankruptcy court, indicating a substantial sum of $14.5 billion to $16.3 billion for distribution to creditors and customers.
FTX Creditors Can Receive Up To 142% Of Claim Amount With New Reorganization Plan
FTX Creditors Can Receive Up To 142% Of Claim Amount With New Reorganization Plan 2

FTX Creditors Anticipate Up to 142% Return in FTX Bankruptcy Resolution

This announcement follows a significant recovery effort, mainly driven by the monetization of assets, including investments held by Alameda Research, a crypto-focused hedge fund led by Sam Bankman-Fried, and litigation claims.

Under the proposed plan, FTX creditors stand to receive payouts exceeding their claims by up to 142%, with most customers expected to receive 118% of their balances at the time of FTX’s Chapter 11 bankruptcy filing. Notably, non-governmental creditors are set to receive 100% of their claims along with up to 9% interest.

FTX’s CEO, John Jay Ray III, revised earlier estimates, promising full repayment to customers despite initial projections of only 90% reimbursement. However, equity holders will not receive any leftover funds after all debts are settled.

FTX’s Resurgence: Asset Monetization and Crypto Surge Drive Recovery

The surge in available funds, from $6.4 billion earlier this year to the current estimate, is attributed to the general rise in cryptocurrency prices, including Solana, heavily backed by FTX’s founder, Sam Bankman-Fried. Additionally, the company has liquidated various assets, including ventures like Anthropic, an artificial intelligence company.

While the proposed payouts signal a favorable outcome for FTX, the final decision rests with US Bankruptcy Judge John Dorsey, who will consider creditor votes on the plan later this summer. The plan, subject to court approval, aims to provide swift resolutions, particularly for FTX creditors with claims of $50,000 or lower, who could see payments within two months if the plan is endorsed by the court.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

Alameda Research

FTX

FTX Creditors

Sam Bankman-Fried

Solana

Avatar of Harold

Author

Harold

With a passion for untangling the complexities of the financial world, I've spent over four years in financial journalism, covering everything from traditional equities to the cutting edge of venture capital. "The financial markets are a fascinating puzzle," I often say, "and I love helping people make sense of them." That's what drives me to bring clear and insightful financial journalism to the readers of Coincu.
News

FTX Creditors Can Receive Up To 142% Of Claim Amount With New Reorganization Plan

Key Points:

  • FTX proposes a $14.5 to $16.3 billion payout for creditors and customers, signaling a major recovery from bankruptcy.
  • FTX creditors may receive up to 142% of their claims, while most customers could get back 118% of their balances.
  • Asset monetization and crypto price surges drive FTX’s turnaround, offering hope for a favorable resolution.
According to Reuters, crypto exchange FTX has unveiled an amended reorganization plan in a U.S. bankruptcy court, indicating a substantial sum of $14.5 billion to $16.3 billion for distribution to creditors and customers.
FTX Creditors Can Receive Up To 142% Of Claim Amount With New Reorganization Plan
FTX Creditors Can Receive Up To 142% Of Claim Amount With New Reorganization Plan 4

FTX Creditors Anticipate Up to 142% Return in FTX Bankruptcy Resolution

This announcement follows a significant recovery effort, mainly driven by the monetization of assets, including investments held by Alameda Research, a crypto-focused hedge fund led by Sam Bankman-Fried, and litigation claims.

Under the proposed plan, FTX creditors stand to receive payouts exceeding their claims by up to 142%, with most customers expected to receive 118% of their balances at the time of FTX’s Chapter 11 bankruptcy filing. Notably, non-governmental creditors are set to receive 100% of their claims along with up to 9% interest.

FTX’s CEO, John Jay Ray III, revised earlier estimates, promising full repayment to customers despite initial projections of only 90% reimbursement. However, equity holders will not receive any leftover funds after all debts are settled.

FTX’s Resurgence: Asset Monetization and Crypto Surge Drive Recovery

The surge in available funds, from $6.4 billion earlier this year to the current estimate, is attributed to the general rise in cryptocurrency prices, including Solana, heavily backed by FTX’s founder, Sam Bankman-Fried. Additionally, the company has liquidated various assets, including ventures like Anthropic, an artificial intelligence company.

While the proposed payouts signal a favorable outcome for FTX, the final decision rests with US Bankruptcy Judge John Dorsey, who will consider creditor votes on the plan later this summer. The plan, subject to court approval, aims to provide swift resolutions, particularly for FTX creditors with claims of $50,000 or lower, who could see payments within two months if the plan is endorsed by the court.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.