FTX has filed an unexpected reorganization plan, indicating that almost all account holders will receive full repayment for their claims, potentially even with additional cash. This windfall comes as FTX recovered billions more dollars than initially expected following its collapse in November 2022.
The recovered funds, totaling around $15 billion, primarily came from selling venture capital investments made by FTX and its affiliate Alameda Research. This amount is sufficient to fully reimburse nearly all creditors with claims of $50,000 or less, which represents 98% of all creditors. The remaining creditors will also see substantial recovery, with a minimum payout of 118% of their claims.
Beyond mere repayment, the proposed plan includes potential additional compensation to address the time value of money lost since FTX's bankruptcy. This means customers may not only get their principal back but also receive interest on their funds.
FTX Victims: Justice served? Beyond Claims Settlement, Possible Bonus Is Awaiting
The payout to over 2 million customers marks a rare occurrence in typical US bankruptcy cases, where creditors often receive only a fraction of their owed amounts. Depending on their claim type, some creditors could potentially receive up to 142% of their initial losses, surpassing what they originally invested.
FTX's payout plan exceeds initial expectations significantly. In October, the company projected a return of just 90% of customer funds. This outlook improved in January when CEO John Ray III expressed confidence in full repayment for customers.
According to the filing, FTX is expected to have a substantial surplus of cash, totaling $16.3 billion, after liquidating all its assets. This surplus surpasses the amount owed to customers and other non-government lenders, which amounts to about $11.2 billion.
The filing stated, "The debtors and their stakeholders have had time to explore strategic options and runway to monetize illiquid and volatile investments gradually over time."
FTX Asset Fire Sale Strengthens Creditors' Repayment Plan
FTX had been actively liquidating its assets to generate the necessary funds for reimbursing creditors. This involved divesting investments held by both FTX and its affiliate, such as an 8% ownership stake in the AI startup Anthropic. This stake was sold to institutional investors for a sum of $884 million in March.
While a proposed distribution plan has been outlined, its implementation hinges on formal approval from the Delaware bankruptcy court. Even if sanctioned, the disbursement of funds to creditors and account holders is anticipated to occur several months down the line, as FTX progresses through the final phases of its bankruptcy proceedings.
May 2024, Cryptoniteuae