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- The court-approved FTX bankruptcy plan ensures $6.6 billion in repayments to creditors, despite some opposition on payout modalities.
- The approval closes a major chapter in FTX’s collapse, but uncertainty looms over the potential revival of the exchange.
As repayments are based on lower bankruptcy filing prices, CNF previously reported that FTX creditors are discontent with receiving only 10-25% of their holdings. After nearly two years since the collapse of the FTX trading platform, Judge John Dorsey of the U.S. Bankruptcy Court for the District of Delaware has finally approved the much-anticipated FTX bankruptcy plan.
This approval brings a sense of closure for many affected, particularly for creditors whose funds have been locked on the exchange since the collapse. The approval marks a significant step forward, especially under the leadership of John Ray III, who took control of FTX following its downfall.
Just today, FTX’s official X account shared that the U.S. Bankruptcy Court for the District of Delaware has confirmed FTX’s Plan of Reorganization.
The FTX Debtors today announced that the United States Bankruptcy Court for the District of Delaware has confirmed FTX’s Plan of Reorganization. Read about it here: https://t.co/kETV0rgs0v
— FTX (@FTX_Official) October 7, 2024
According to the approved plan, a total of $6.6 billion will be distributed to creditors over the next 4 to 8 weeks, a move that has been widely supported by 94% of creditors in the “dotcom customer entitlement claims.” Although the approval was widely anticipated, it was not without opposition.
FTX creditor representative Sunil Kavuri voiced concerns, particularly regarding the payment modalities, preferring cryptocurrency equivalents instead of fiat currency payouts. However, the court has secured approval for payments in dollars, leading to a total payout that could reach up to $16 billion. Judge Dorsey emphasized the complexity of the case, describing it as one of the most intricate Chapter 11 bankruptcy proceedings.
FTX’s Future and Uncertain Path Ahead
While the bankruptcy plan has been approved, the future of FTX remains unclear. John Ray III had initially expressed hope for restarting the exchange, and in-house lawyer Andrew Dietderich stated that attempts were made to seek investor interest. However, investors did not show any positive enthusiasm for reviving the defunct platform, and the management has yet to confirm whether the FTX 2.0 plans will be revisited.
As previously highlighted by CNF, FTX founder Sam Bankman-Fried and his family are embroiled in a $100M political donation scandal. Bankman-Fried has appealed his 25-year prison sentence, asserting that he does not deserve such a lengthy term. In contrast, former Alameda Research CEO Caroline Ellison accepted her 2-year sentence, reflecting on her inability to walk away from the firm’s collapse.
