As an analyst with over two decades of experience navigating financial crises and reorganizations, I must admit, the FTX reorganization plan has been one of the more intriguing cases I’ve come across recently. It’s not every day that we see such a high-profile cryptocurrency exchange on the brink of collapse and then, surprisingly, receiving strong support from creditors.
After a thorough review of the FTX’s restructuring proposal, it is anticipated that the troubled digital currency exchange will eventually disburse approximately $6 billion to its affected users in the future. It is important to note that these recipients are entities that suffered losses when the company collapsed in 2022. This restructuring plan was initially shared for feedback from an advisory committee, and now, it appears that their favorable opinion has been secured.
Unexpected Support From Creditors
FTX has seen strong creditors’ backing, which sets the tone for the distribution of $6.83 billion to all impacted traders and users. About 94% of the voting creditors listed in the “dot com customer entitlement claims” class voted in favor of the plan. All committee members, about 66 of them, voted YES to the proposal, marking a crucial step to the distribution of FTX creditors’ assets.
As reported by Kroll Restructuring Administration, who oversees vote solicitation, the majority of creditor groups endorsed the proposed plan. Two classes of creditors, however, did not cast their votes but were assumed to be in favor of the FTX reorganization plan. The progress made with this plan has led experts to view the upcoming confirmation hearing on October 7 as merely a formality.
According to Analyst Tom Dunleavy’s prediction, the distribution process should be completed within a span of 4-8 weeks from now. It is important to note that this distribution should be wrapped up by the end of this year for all creditors who have submitted their claims. Previously reported by Coingape, the FTX repayments are expected to start following three “omnibus hearings” on October 22, November 20, and December 12.
FTX Reorganization Plan And Creditors Allocation
Approximately 89.1% of creditors categorized as “US customer entitlement claims” are expected to receive approximately $60,990,000. Additionally, around 95.88% of creditors within the “dotcom convenience claims” group will be allocated roughly $223,590,000. The majority of these creditors are anticipated to receive at least 118% of their claimed amount in cash.
It’s important to mention that these estimates were derived from the crypto market values at the time they were submitted. Given that the actual calculation didn’t consider the current values, the creditors may experience some financial setbacks as a result.
Beyond this proposed solution, John Ray III, who serves as both CEO and Chief Restructuring Officer at FTX, emphasized that this plan aims to fully compensate non-government creditors. This includes repaying 100% of their claims along with interest, and addressing intricate disagreements not only with governmental bodies but also with private organizations as well.
Simultaneously, key figures involved in the exchange have been held accountable for their actions. Most recently, Caroline Ellison, former CEO of Alameda Research, was given a two-year sentence due to her involvement in the FTX’s downfall. On the other hand, Sam Bankman-Fried, ex-CEO of FTX, is currently serving a 25-year prison term.
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2024-10-01 21:43