FTX Reorganization Plan Gains 95% Creditor Support, Promises 100% Repayment and Interest

• Over 95% of FTX creditors back the reorganization plan, representing 99% of claims by value, signaling broad consensus.
• FTX’s plan promises 100% repayment plus interest for non-governmental creditors, avoiding lengthy legal disputes.
• FTX’s asset recovery spans multiple jurisdictions, with a potential distribution value between $14.5 billion and $16.3 billion.

The bankrupt crypto exchange FTX and its related debtors have got a substantial amount of preliminary backing for their amended Plan of Reorganization submitted to the U.S. Bankruptcy Court for the District of Delaware. 

According to recent updates, over 95% of creditors who voted have shown support for the plan, representing 99% of claims by value. This strong turnout demonstrates a broad consensus among FTX’s creditors, including those associated with FTX U.S. and Dotcom. The final voting results will be confirmed during a hearing set for October 7, 2024.

Creditors Support 100% Repayment Plan

The proposed reorganization plan offers the potential for a 100% repayment of bankruptcy claims plus interest for non-governmental creditors. The plan aims to resolve various disputes with governmental and private entities, thus avoiding protracted legal battles that could delay creditor payments. 

Notably, the plan outlines the distribution of nearly all assets associated with the bankrupt exchange, regardless of their location during the November 2022 bankruptcy. FTX estimates that the total value of the property to be collected, converted to cash, and distributed will range between $14.5 billion and $16.3 billion.

Asset Recovery Across Multiple Jurisdictions

The recovery process involves assets held by FTX’s Chapter 11 debtors and those managed by entities like the Joint Official Liquidators of FTX Digital Markets Ltd in the Bahamas and the Securities Commission of The Bahamas. 

A substantial portion of these assets stems from the realization of the value of holdings by Alameda Research and FTX Ventures. This extensive recovery effort highlights the complexity and scale of FTX’s bankruptcy, highlighting the challenges of managing assets spread across multiple jurisdictions.

Interest Payments and Legal Challenges

In addition to the repayment plan, the reorganization plan includes provisions for interest payments to the primary classes of customers and creditors. These interest rates may reach up to 9%, covering the period from the commencement of the Chapter 11 cases until the distribution date. 

However, the ongoing legal challenges surrounding FTX remain significant. Notably, the exchange faces lawsuits involving former executives, including the imprisonment of former CEO Sam Bankman-Fried for financial fraud. Furthermore, FTX and its affiliate, Alameda Research, have reached a settlement with the CFTC, committing to repay $12.7 billion to creditors.