The now-defunct FTX cryptocurrency exchange has introduced a new repayment plan that promises to pay back all of its creditors and clients in full, as well as provide them billions to cover the value of their investments over time.
May 7 was the day when FTX announced in a press statement that it would be paying back 98% of its clients, or at least 118% of their allowable claims, in cash. The defunct cryptocurrency exchange has reorganized and submitted a fresh plan to the Delaware Bankruptcy Court.
A centralized distribution of all assets held by the firm at the time of its collapse in November 2022 to creditors and consumers will be part of the reorganization plan, which aims to distribute monies to customers impacted by FTX’s fraud operation.
The cryptocurrency exchange has come clean about the fact that it has raised $14.5 billion to $16.3 billion via the sale of corporate assets and properties. This comprises assets that are in the possession of the “Chapter 11 debtors,” FTX Australia, the Joint Official Liquidators of FTX Digital Markets Ltd., and a number of private parties that have helped with the repayment and recovery.
Repaying governmental and non-governmental creditors is a thorough method, as outlined in FTX’s repayment policy. According to the crypto market, non-governmental creditors would get full payment after the Bankruptcy Court determines the amount of their claims.
In contrast, a subordination agreement is being considered for the benefit of government creditors, with the principal classes of consumers and creditors receiving timely interest payments of up to 9%.
Another distinct grouping that the repayment plan would create is the “convenience class,” which will include creditors whose claims are worth $50,000 or less. Smaller creditors will benefit from this reorganization since it will simplify and speed up the payment process.
The Bankruptcy Court has not yet approved the revised repayment plan that the exchange has been working on. On the other hand, with plan approval, creditors may anticipate receiving 118% of their allowable claims within 60 days of the plan’s effective date.
As part of its recently announced payment restructuring strategy, FTX detailed several agreements reached in peaceful negotiations with key economic players. The Court has not yet approved all of them, nevertheless.
One of the most important settlements resolves the $24 billion in claims made by the IRS. As compensation, FTX has committed to paying $200 million in cash and issuing a $685 million subordinate claim.
Also, FTX has offered to settle tax charges that surfaced after the Chapter 11 lawsuits began with the Internal Revenue Service and the Commodities Futures Trading Commission (CFTC). In addition, the cryptocurrency exchange disclosed a previously authorized settlement with BlockFi, FTX’s biggest creditor, and the Joint Official Liquidators of FTX Digital Markets, Ltd.
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