A U.S. judge approved FTX’s plan to poll creditors on its Chapter 11 repayment.
FTX users will soon have the opportunity to vote on the proposed multibillion-dollar plan to pay back individuals whose funds were trapped on FTX since its collapse.
Judge John Dorsey of the District of Delaware is allowing FTX advisers to seek customer votes on their Chapter 11 plan. If approved, this plan will repay customers and address government penalties related to the collapse of Sam Bankman-Fried’s crypto business.
Repayment
Creditors have the power to influence restructurings through Chapter 11 voting, and while FTX’s plan is supported by key committees representing customer interests, there is opposition from a vocal contingent demanding major changes.
According to Bloomberg, the majority of FTX clients are set to receive 119% of their holdings on the day the company filed for Chapter 11 in November 2022. Court documents suggest that other creditors may reclaim as much as 143% of their owed amounts.
FTX’s legal team has asserted that bankruptcy legislation allows them to only pay back funds based on the cost of assets as of 2022, despite the rise in cryptocurrency prices since then.
The company intends to use cryptocurrency prices from November 2022, when it declared bankruptcy, as the basis for repayments. In other words, if a customer had one Bitcoin (BTC) during the FTX collapse, they would receive repayment valued at roughly $16,800, which is significantly lower than Bitcoin’s current value of about $61,000.
FTX claims it has recovered $16 billion in assets, including $12 billion in cash, enough to repay all customer claims in full based on 2022 prices.
In addition to all this, FTX will pay the Internal Revenue Service $200 million in priority claims.
