News

FTX Reorganization Plan Is Facing Fierce Opposition

August 25, 2024 - Around 3 mins mins to read

Key Points:

  • The U.S. Trustee and a group of creditors have raised major objections to the FTX reorganization plan.
  • Despite legal challenges, FTX CEO John J. Ray III remains confident that the reorganization plan will proceed as scheduled.
Recent filings in the FTX bankruptcy case show broad objections to the FTX reorganization plan by the U.S. Trustee and a group of creditors, The Block first reported the news.
FTX Reorganization Plan Is Facing Fierce Opposition

Read more: Ryan Salame Reveals Government Betrayal in Broken FTX Plea Deal, Aug 22-2024!

U.S. Trustee and Creditors Oppose FTX Reorganization Plan

Although the FTX reorganization plan had broad support from the creditor body, with over 95% of the votes in its favour, it is still marred by legal challenges that may have implications for how it will be implemented.

The U.S. Trustee overseeing the case, Andrew R. Vara, listed the top ten major objections to the plan. Most of the objections by Vara are on three major issues: very broad legal releases given to most of the bankruptcy officials; different treatment of same-class creditors based on their size; and the failure to exclude what has been claimed as unnecessary expenditure related to a data breach by one of the estate service providers.

Vara criticizes that estate professionals have very highly excessive immunities and such immunities are much far beyond that protection typically afforded under the relevant statutes. He also slammed the FTX reorganization plan permitting the expenses related to breach to be covered, saying that it should not be left upon the estate.

Beyond Vara, others who have filed complaints include Sunil Kavuri, who represents the largest group of FTX creditors, and other representatives of the now-defunct platform’s retail customers.

Kavuri has been a long-time proponent of in-kind reimbursements, meaning that creditors who lost Bitcoin should get it back—not the monetary equivalent of whatever the price is at the time. Doing this might bypass tax liabilities on the losses of creditors.

FTX CEO Remains Confident Despite Legal Objections

Despite such challenges, the FTX CEO, John J. Ray III, was optimistic about the reorganization plan because it enjoyed overwhelming support from the creditors, and it was on course to reach completion as originally projected with full payment and interest to all its creditors other than governmental.

The case still unravels with an independent examiner also tasked to probe into the bankruptcy proceedings after a ruling reversing an initial denial of his appointment, Robert Cleary.

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.

Andrew R. Vara

Bitcoin

FTX

FTX Reorganization Plan

John J. Ray III

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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 Reorganization Plan Is Facing Fierce Opposition

Key Points:

  • The U.S. Trustee and a group of creditors have raised major objections to the FTX reorganization plan.
  • Despite legal challenges, FTX CEO John J. Ray III remains confident that the reorganization plan will proceed as scheduled.
Recent filings in the FTX bankruptcy case show broad objections to the FTX reorganization plan by the U.S. Trustee and a group of creditors, The Block first reported the news.
FTX Reorganization Plan Is Facing Fierce Opposition

Read more: Ryan Salame Reveals Government Betrayal in Broken FTX Plea Deal, Aug 22-2024!

U.S. Trustee and Creditors Oppose FTX Reorganization Plan

Although the FTX reorganization plan had broad support from the creditor body, with over 95% of the votes in its favour, it is still marred by legal challenges that may have implications for how it will be implemented.

The U.S. Trustee overseeing the case, Andrew R. Vara, listed the top ten major objections to the plan. Most of the objections by Vara are on three major issues: very broad legal releases given to most of the bankruptcy officials; different treatment of same-class creditors based on their size; and the failure to exclude what has been claimed as unnecessary expenditure related to a data breach by one of the estate service providers.

Vara criticizes that estate professionals have very highly excessive immunities and such immunities are much far beyond that protection typically afforded under the relevant statutes. He also slammed the FTX reorganization plan permitting the expenses related to breach to be covered, saying that it should not be left upon the estate.

Beyond Vara, others who have filed complaints include Sunil Kavuri, who represents the largest group of FTX creditors, and other representatives of the now-defunct platform’s retail customers.

Kavuri has been a long-time proponent of in-kind reimbursements, meaning that creditors who lost Bitcoin should get it back—not the monetary equivalent of whatever the price is at the time. Doing this might bypass tax liabilities on the losses of creditors.

FTX CEO Remains Confident Despite Legal Objections

Despite such challenges, the FTX CEO, John J. Ray III, was optimistic about the reorganization plan because it enjoyed overwhelming support from the creditors, and it was on course to reach completion as originally projected with full payment and interest to all its creditors other than governmental.

The case still unravels with an independent examiner also tasked to probe into the bankruptcy proceedings after a ruling reversing an initial denial of his appointment, Robert Cleary.

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.
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