Court Approves FTX Reorganization Plan

Delaware bankruptcy judge John Dorsey approved the plan for distributing payments to creditors of the collapsed bitcoin exchange FTX.

“I want to congratulate everyone. This is a textbook example of how to handle a very complex Chapter 11 bankruptcy,” stated Dorsey.

The plan was supported by 94.48% of FTX clients with claims on assets valued at $6.83 billion. About 98% of creditors will receive at least 118% of their claims in fiat at the rate at the time of the bankruptcy filing.

According to the press release, the total value of accumulated assets will range from $14.7 billion to $16.5 billion. The sums will be paid within 60 days after the plan comes into effect.

The leader of the exchange’s largest creditor group, Sunil Kavuri, criticized the decision. He stated that affected users will receive between 10% and 25% of their deposited cryptocurrencies.

David Adler, an attorney for the clients, noted that FTX compensation recipients will face tax obligations.

However, Stephen Coverick from the law firm Alvarez & Marsal North America acknowledged the exchange’s inability to settle claims in kind. Although this topic “was discussed in detail,” he added.

“The debtors do not have the cryptocurrency necessary to make payments in kind. Essentially, they never had assets in the proportions that clients believed were in their accounts,” emphasized the lawyer.

Judge Dorsey supported payments in fiat. He also noted that the value of the exchange’s native token, FTT, is zero. In the absence of opportunities for FTX’s revival, there is no basis for the token’s value to increase, he concluded.

The platform’s administrators considered plans for its relaunch. However, the exchange’s lawyer, Andrew Dietderich, reported in January that no investor was willing to fund this.

Back in November, former FTX head Sam Bankman-Fried was sentenced to 25 years in prison for fraud. Former CEO of affiliated company Alameda Research, Caroline Ellison, received only two years due to her “remarkable” cooperation with the investigation.