The U.S. Bankruptcy Court recently approved FTX’s reorganization plan.
Grygo is the chief content officer for FTF & FTF News.
News cycles are getting shorter and the volumes of news that we process are increasing. So, it’s important to stop and do a follow-up of an important story every once in a while.
For instance, the bankruptcy estate of FTX Trading Ltd. (d.b.a. FTX.com) has a little follow-up news for its affiliated debtors via the United States Bankruptcy Court for the District of Delaware.
As you may recall, FTX filed for Chapter 11 bankruptcy protection in November 2022 and its affiliated debtors and debtors-in-possession filed for relief under Title 11 of the Bankruptcy Code via the bankruptcy court of Delaware.
The bankruptcy filing followed allegations of a massive cryptocurrency fraud led by Sam Bankman-Fried, who ran FTX, which operated a cryptocurrency exchange and a crypto hedge fund. The resulting scandal led to the downfall of FTX and Bankman-Fried ultimately being sentenced to 25 years in prison on March 28, 2024. He also had to forfeit $11 billion.
So, the court has “confirmed FTX’s Plan of Reorganization, less than two years after its historic bankruptcy filing,” according to the FTC bankruptcy estate.
“Under the terms of the plan, 98 percent of the creditors of FTX by number will receive approximately 119 percent of the amount of their allowed claims within 60 days after the effective date of the plan, subject to know-your-customer and other distribution requirements,” according to the official announcement.
“FTX projects that the total value of property collected, converted to cash, and available for distribution will be between $14.7 billion and $16.5 billion. This amount includes assets under the control of the Chapter 11 Debtors as well as assets under the control of the Joint Official Liquidators of FTX Digital Markets, Ltd. (Bahamas), the Administrators of FTX Australia, the United States Department of Justice, and dozens of private parties that have cooperated in the recovery efforts,” the announcement continues. “The Debtors will separately announce in due course the plan’s effective date and estimated first distribution date.”
Old school due diligence has helped with this milestone “on our pathway to distributing cash to customers and creditors,” says John J. Ray III, CEO and chief restructuring officer of FTX, in a prepared statement.
“Today’s achievement is only possible because of the experience and tireless work of the team of professionals supporting this case, who have recovered billions of dollars by rebuilding FTX’s books from the ground up and from there marshaling assets from around the globe,” Ray says. “It also reflects the strong collaboration we have had with governments and agencies from around the world that share our goal of mitigating the wrongdoings of the FTX insiders.”
Ray adds that he and his group “are poised to return 100 percent of bankruptcy claim amounts plus interest for non-governmental creditors through what will be the largest and most complex bankruptcy estate asset distribution in history,” according to his statement.
“The estate is working to finalize arrangements to make distributions to creditors across more than 200 jurisdictions around the world. In preparation for this process, we are finalizing agreements to retain specialized agents to assist us in getting recoveries to customers around the world as safely and expeditiously as possible. I want to thank all customers and creditors of FTX for their patience throughout this process,” Ray says
It will be interesting to see how the ultimate distribution goes – let’s hope it’s without friction and that all of FTX’s customers get the compensation they deserve.
The FTX Debtors are represented by Sullivan & Cromwell LLP as legal counsel and are assisted by Alvarez & Marsal North America, LLC as financial advisor, Perella Weinberg Partners LP as investment banker, Quinn Emanuel Urquhart & Sullivan, LLP as special counsel and Landis Rath & Cobb LLP as Delaware counsel, officials say.
More about the court proceedings can be found here: https://cases.ra.kroll.com/FTX/
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