FTX Reorganization Plan Nears Approval
Bankrupt crypto exchange FTX and related debtors have indicated their preliminary agreement to the reorganization plan submitted to the US Bankruptcy Court for the District of Delaware.
FTX Reorganization Plan Nears Approval
According to a recent press release, the bankrupt crypto exchange and its affiliated debtors said they have received substantial backing for the amended Plan of Reorganization submitted to the United States Bankruptcy Court for the District of Delaware. Based on unofficial voting updates, over 95% of the creditors who voted for the Plan have voted in the affirmative.
These votes represent 99% of the claims by value, thus showing the general agreement among all the creditors, including those linked to FTX U.S. and Dotcom.
The FTX Debtors today announced overwhelming support from Creditors for their Plan of Reorganization. Read about it here: https://t.co/tmEIi5z8AD
— FTX (@FTX_Official) August 21, 2024
John J. Ray III, the CEO and Chief Restructuring Officer of FTX, expressed his appreciation for this high voting turnout, arguing that it showcases support for the reorganization plan.
The Plan offers the possibility of repaying 100% of the amounts of the bankruptcy claims and interest to the non-governmental creditors. It also seeks to address various contentious issues with both governmental and private counterparts, which would help avoid lengthy and costly legal battles and expedite the process of paying back creditors.
Asset Recovery and Distribution
The reorganization plan provides for the distribution of almost all the assets related to the bankrupt crypto exchange, regardless of their location at the time of the company’s bankruptcy in November 2022. According to bankrupt crypto exchange, the total value of property that will be collected, converted to cash, and distributed will be between $14.5 billion and $16.3 billion.
This recovery involves the assets owned by the firm’s Chapter 11 debtors and assets administered by various entities, such as the Joint Official Liquidators of FTX Digital Markets Ltd (Bahamas) and the Securities Commission of The Bahamas. It was mainly driven by the realization of the value of the various assets owned by Alameda Research and FTX Ventures.
Recovery Steps Taken
In addition to the ongoing restructuring processes, FTX has struggled with numerous legal issues, including lawsuits against its former executives.
Some of these are the imprisonment of the former CEO, Sam Bankman-Fried for 25 years and the order to pay a fine of $11 billion for financial fraud.
Similarly, the embattled crypto exchange and its affiliate, Alameda Research, have also reached a settlement with the CFTC, which will require them to pay back $12.7 billion to the creditors.
Conclusion
With the reorganization plan approaching approval, FTX has cleared a significant hurdle in its recovery journey. Despite the numerous legal challenges it faces, FTX has shown commitment to redeeming its creditors and restarting its operations as a reorganized entity. As creditors await the final vote count for the reorganization plan, it’s essential to monitor the situation and gauge how the company will emerge from its ongoing restructuring process.
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