FTX’s Bold Plan for Creditor Reimbursement Offers Over 100% Return
FTX proposes to repay 98% of its creditors with 118% of their claims in a sweeping new plan, pending approval from a Delaware bankruptcy court.
FTX, the cryptocurrency exchange that collapsed in 2022, has unveiled a comprehensive reorganization plan aimed at reimbursing its creditors. Under the proposed scheme, a staggering 98% of creditors are set to receive 118% of their claims in cash within two months of court approval. This ambitious plan also extends to non-governmental creditors who will receive 100% of their claims plus up to 9% interest.
The plan, still pending approval from the Delaware bankruptcy court, reflects FTX’s recent financial maneuvers, including asset liquidation and stake sales in various ventures. Notably, the sale of FTX’s 8% stake in AI startup Anthropic in March brought in $884 million. These efforts have amassed a significant cash pile estimated between $14.5 and $16.3 billion, ready for distribution once the plan gets the green light.
The reorganization comes after FTX’s admission of a massive shortfall at the time of its Chapter 11 filing, with the company holding only a fraction of the Bitcoin and Ethereum it was believed to possess. This financial discrepancy meant that despite the cryptocurrency market’s resurgence—Bitcoin alone has soared by nearly 280%—creditors have not benefited from the rising market values.
John J. Ray III, the CEO and chief restructuring officer of FTX, expressed optimism about the plan.
We are pleased to propose a Chapter 11 plan that contemplates the return of 100% of bankruptcy claim amounts plus interest.
This plan contrasts sharply with previous estimates, which in October expected only to cover 90% of customer funds.
Despite the proposed payouts being higher than earlier projections, some industry experts remain skeptical. Critics argue that creditors will still not receive amounts equivalent to current market prices, which could have been significantly more profitable had their funds not been tied up in bankruptcy proceedings. Mike Belshe, CEO of BitGo, voiced his concerns on X, saying, “Let’s not pretend victims are getting their money back,” indicating that the actual value lost during the crypto’s rise remains unaddressed.
Moreover, the plan addresses claims from regulators and government agencies like the IRS and the U.S. Commodity Futures Trading Commission (CFTC). The IRS has settled for a $200 million cash payment and a $685 million subordinated claim, which will be paid after other creditors.
FTX has also earmarked a special fund for “supplemental restitution” to certain customers, though the details remain under wraps until finalized. A court hearing in June is expected to further discuss and possibly finalize the proposal, marking a critical step in FTX’s efforts to rectify the financial damage from its 2022 downfall.
