FTX Reorganization Plan Receives Overwhelming Creditor Support

In a significant development, the bankrupt crypto exchange FTX and its affiliated debtors have announced that their reorganization plan has garnered substantial support from creditors. The preliminary agreement for the Plan of Reorganization has been submitted to the US Bankruptcy Court for the District of Delaware, marking a crucial step towards resolving the financial turmoil that has plagued the exchange.

According to a press release issued by FTX, over 95% of the creditors who participated in the voting process have voted in favor of the amended Plan of Reorganization. This overwhelming support represents 99% of the total claims by value, indicating a strong consensus among all creditors, including those associated with FTX U.S. and Dotcom.

John J. Ray III, the CEO and Chief Restructuring Officer of FTX, expressed gratitude for the high turnout of creditors in support of the reorganization plan. He emphasized that the Plan offers the possibility of repaying 100% of the bankruptcy claims and interest to non-governmental creditors, thereby addressing contentious issues and expediting the repayment process.

Asset Recovery and Distribution

The reorganization plan outlines the distribution of assets related to the bankrupt crypto exchange, with an estimated total value ranging between $14.5 billion and $16.3 billion. This recovery process will involve the collection, conversion to cash, and distribution of assets owned by the firm’s Chapter 11 debtors and entities such as FTX Digital Markets Ltd (Bahamas) and the Securities Commission of The Bahamas.

Furthermore, the plan includes provisions for the payment of interest to customers and creditors at a rate of up to 9% from the start of the Chapter 11 cases until the distribution date. The confirmation hearing for the reorganization plan is scheduled for October 7, 2024, where the final vote counts will be announced.

Legal Challenges and Settlements

FTX has faced a series of legal challenges, including lawsuits against former executives and allegations of financial fraud. The former CEO, Sam Bankman-Fried, was sentenced to 25 years in prison and ordered to pay a substantial fine for his involvement in fraudulent activities.

Additionally, FTX and its affiliate, Alameda Research, have reached a settlement with the CFTC, agreeing to repay $12.7 billion to creditors as part of the resolution process. These legal hurdles have added complexity to the reorganization efforts but have not deterred the exchange from moving forward with its restructuring plans.

The approval of the reorganization plan by a majority of creditors signals a positive step towards resolving FTX’s financial woes and restoring confidence in the cryptocurrency exchange. The final confirmation of the plan in October will mark a crucial milestone in the path to recovery for FTX and its stakeholders.