- FTX plans to pay over 100% of claims to some creditors.
- FTX expects collection of $14.5 — $16.3 billion for distribution.
Bankrupt crypto exchange FTX plans to pay creditors’ claims fully, as some stand to get over 100% of their claims.
In a recent proposal awaiting Bankruptcy Court approval, creditors with $50K claims or less will get about over 118% compensation. Part of FTX’s plan, dated the 7th of May, read,
“Debtors anticipate that 98% of the creditors of FTX by number will receive approximately 118% of the amount of their allowed claims within 60 days after the effective date of the Plan.”
Reinforcing FTX’s intention to compensate creditors fully, the Chief Structuring Officer and FTX CEO, John J. Ray III, said,
“We are pleased to be in a position to propose a Chapter 11 plan that contemplates the return of 100% of bankruptcy claim amounts plus interest for non-governmental creditors”
FTX fund recovery and plans
It is worth noting that the compensation will be based on November 2022 discounted prices. For perspective, Bitcoin [BTC] traded at $15K in November 2022, which is now about 300% up to the current $62K value.
Part of the statement mentioned that,
“Other creditors are to receive 100% of allowed claims plus billions in compensation for the time value of their investments.”
The defunct exchange estimated the total recovered funds could be $14.5 billion and $16.3 billion.
For perspective, FTX had a massive shortfall before the bankruptcy proceeding, with only 0.1% of BTC and 1.2% of Ethereum [ETH] expected customers’ funds.
Much of the funds have been recovered from selling FTX’s crypto holdings like Solana [SOL], Avalanche [AVAX], and Polygon [MATIC].
Additionally, the sale of a majority stake in AI startup Anthropic saw the defunct exchange scoop $884 million.
If the court approves a consensus settlement with government entities, other creditors could receive additional payments in addition to the recovered funds.
One such arrangement is with US DoJ, which FTX claims could see “over $1.2 billion of forfeiture proceeds” extended to creditors.
Reacting to the plan, Bloomberg ETF analyst James Seyffart emphasized that FTX creditors would’ve been better off holding on to their assets. However, on the over 100% pay move, Seyfart said,
“But allowing people to get more than 100% of their claim value from the time of bankruptcy is a move in the *Morally Correct* direction.”