Creditors of the failed cryptocurrency exchange FTX may recover up to 40% of their funds. This forecast was given by the investment bank Jefferies Financial Group, according to The Block.
In an interview with the publication, Joseph Femia said that this share would be even lower after paying administrative and legal services in the exchange’s bankruptcy process.
FTX’s total liabilities are in the $10-13 billion range, assets are estimated at $2-4 billion. This gives a rough possibility of recovering 20-40% of funds blocked in the company, said Femia. The figures could change as new information about the exchange’s balance sheets comes in.
Jefferies expects legal fees, restructuring professionals and other related costs to run from $500 million to $1 billion. This implies the recovery to be reduced to 10-35%.
In such cases many creditors prefer to sell their claims rather than wait for the bankruptcy process to finish, which can drag on for years. Jefferies is an active player in the nascent market for FTX liabilities, making several purchases and nearing the completion of a number of other deals.
According to The Block, buyers actually pay creditors of the exchange $0.05-0.06 per $1 of claims.
The bank has allocated five employees to work on FTX. Femia added that there are problems with verifying the obligations in the case of the exchange.
“Usually, in bankruptcy cases you have a register of claims. The tricky thing with FTX is that there is currently no evidence,” he said.
The bank’s team is asking potential sellers to provide a package of information about the history of their asset movements on the platform to confirm their right to compensation.
Earlier, in November, new FTX CEO John Ray stated that the company absolutely lacked control over cash flows and reliable financial information.
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