FTX Announces Compensation Plan, Promising Billions More to Creditors
FTX estimated the total cash available for distribution to range between $14.5 billion and $16.3 billion, pending finalization and approval by the bankruptcy court.
FTX, the bankrupt cryptocurrency exchange, unveiled a comprehensive compensation plan aimed at providing substantial payouts to its creditors, with a focus on fairness and transparency. According to the new plan released on Tuesday, creditors with claims below $50,000 will receive a remarkable 118% compensation, pending court approval.
The reorganization plan, subject to the U.S. Bankruptcy Court's endorsement, outlines FTX's commitment to returning 98% of its creditors at least 118% of their allowed claims. Additionally, other creditors will be entitled to full repayment along with billions in compensation for the time value of their investments, reflecting the exchange's efforts to address the financial impact of its collapse.
The distribution pool encompasses assets controlled by several entities, including the chapter 11 debtors, liquidators of FTX Bahamas Digital Markets and FTX's Australia unit, the Bahamas Securities Commission, the United States Department of Justice (DOJ), and multiple private parties. FTX emphasized that the amended plan has been shaped by settlements reached with key stakeholders, with certain cases still pending court approval.
FTX CEO John J. Ray expressed satisfaction with the proposed plan, emphasizing the goal of returning 100% of bankruptcy claim amounts plus interest for non-governmental creditors. The plan represents a significant step forward in FTX's journey toward resolving its financial obligations and restoring trust among its stakeholders.
The reorganization plan emphasizes a "centralized distribution" approach, ensuring equitable treatment for FTX customers and creditors affected by the exchange's collapse in 2022, irrespective of the location of their assets. FTX estimated the total cash available for distribution to range between $14.5 billion and $16.3 billion, pending finalization and approval by the bankruptcy court.
Under the proposed plan, creditors with allowed claims below $50,000 will be eligible for the 118% compensation, with repayment scheduled to occur within 60 days after the plan's effective date, contingent upon court approval.
FTX highlighted the monetization of a diverse range of assets, primarily sourced from investments held by Alameda Research and FTX Venture businesses, along with litigation claims. Notably, FTX's minimal exposure to bitcoin and ether at the time of collapse meant that debtors did not benefit from their recent surge in value.
