FTX Reorganization Plan and Distribution Process

Effective Date and Record Date

FTX and its affiliated debtors announced on December 16 that their reorganization plan will take effect on January 3, 2025, and distributions will commence within 60 days.

Announced on December 16, the reorganization plan will take effect on January 3, 2025, and distributions will commence within 60 days.

Distribution Process

FTX has partnered with BitGo and Kraken to manage the distribution process for retail and institutional creditors. According to the claim portal, these service providers will ensure distributions are executed efficiently and securely across supported jurisdictions while also allowing distributions through stablecoins.

The initial distribution will only apply to creditors in the plan’s “Convenience Classes,” and FTX will announce separate payment dates for other classes. Additionally, the firm noted that it will announce additional distribution service providers on its customer portal and official communication channels.

Eligibility

Creditors eligible for the Initial Distribution must complete several key steps before the effective date, such as completing know-your-customer validations, submitting tax forms, and onboarding with distribution partners.

Distributions for transferred claims will only be made to holders whose claims are registered by January 3, 2025, and meet a 21-day notice period without objection.

FTX CEO’s Statement

“We are well positioned to begin executing the distribution of recoveries back to all customers and creditors, and encourage customers to complete the necessary steps to begin receiving distributions in a timely manner.”

FTX CEO John J. Ray III emphasized the importance of meeting eligibility requirements to receive payments promptly, urging creditors to complete necessary steps via the FTX Debtors’ Customer Portal.

Warning Against Phishing Scams

FTX warned users to avoid phishing scams and reminded creditors that official communications will only come through verified channels. The company stressed that it will never request users to connect wallets or provide sensitive financial details outside the official customer portal.

Recovery Plan Approval

US Bankruptcy Judge John Dorsey approved the $16.5 billion recovery plan during a hearing in Wilmington, Delaware, on October 7. The total value is subject to falling to $14.7 billion after its cash conversion.

FTX Collapse

The FTX collapsed in November 2022 after its founder, Sam Bankman-Fried, and other executives mismanaged customers’ funds and used them in other ventures. Authorities estimate the FTX collapse left around 9 million customers and investors facing substantial financial losses.

Conclusion

The reorganization plan and distribution process for FTX and its affiliated debtors are significant steps towards recovering losses for creditors. As the plan takes effect on January 3, 2025, creditors are urged to complete necessary steps to receive distributions in a timely manner. It is essential to remain vigilant against phishing scams and only access official communication channels.

FAQs

Q: What is the effective date of the reorganization plan?

A: The effective date of the reorganization plan is January 3, 2025.

Q: When will distributions commence?

A: Distributions will commence within 60 days of the effective date.

Q: Who is managing the distribution process?

A: FTX has partnered with BitGo and Kraken to manage the distribution process for retail and institutional creditors.

Q: What are the eligibility requirements for the Initial Distribution?

A: Creditors eligible for the Initial Distribution must complete several key steps before the effective date, such as completing know-your-customer validations, submitting tax forms, and onboarding with distribution partners.

Q: How can creditors complete the necessary steps?

A: Creditors can complete the necessary steps via the FTX Debtors’ Customer Portal.

Q: What should creditors do to avoid phishing scams?

A: Creditors should avoid phishing scams and only access official communication channels. FTX will never request users to connect wallets or provide sensitive financial details outside the official customer portal.

Q: What is the total value of the recovery plan?

A: The total value of the recovery plan is $16.5 billion, subject to falling to $14.7 billion after its cash conversion.

Q: What caused the FTX collapse?

A: The FTX collapse was caused by its founder, Sam Bankman-Fried, and other executives mismanaging customers’ funds and using them in other ventures.