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FTX Revamps Reorganization Plan After Founder’s Conviction
Following the conviction of FTX co-founder and former CEO Sam Bankman-Fried, who was sentenced to 25 years in prison, the cryptocurrency exchange has announced an updated reorganization plan that aims to return almost 100% of the funds lost by its customers during the collapse.
Financial Recovery for Former FTX Customers
FTX stated in a recent communication that it anticipates that 98% of its creditors will regain approximately 118% of the value of their claims. Additionally, some creditors will receive their full claims along with substantial interest payments to account for the time value of their investments.
The projected total value of assets earmarked for cash conversion and distribution is estimated to fall within the range of $14.5 billion to $16.3 billion. The funds required to support the revised reorganization plan will be sourced from existing corporate liquidity, available NFTs, proceeds from the wind-down of operations, and any residual assets.
Calculation of Shareholders’ Claims
Shareholders’ entitlements will be computed based on their holdings as of November 2022, when FTX submitted for Chapter 11 bankruptcy protection. This development is likely to be well-received by previous customers who had their funds frozen during the legal procedures. Initially, there were concerns that a substantial portion of the customer deposits held by FTX would remain unrecoverable.
The reorganization strategy is now awaiting finalization and sanction by the bankruptcy court. Customers should expect to start receiving reimbursements within 60 days of the plan being officially activated, pending a court-declared effective date.
“We are gratified to propose a chapter 11 plan that envisions delivering 100% of bankruptcy claim amounts in addition to interest for non-governmental creditors,” said John J. Ray III, the CEO and chief restructuring officer of FTX. He also expressed his gratitude to the company’s patrons and creditors for their endurance during the prolonged 17-month-long process.
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