FTX Creditors Set for Cash Windfall Beyond 100% of Claims
A new reorganization plan filed Tuesday night proposes that nearly all FTX account holders will be repaid in full for their claims. They may even receive additional cash on top of that amount.
This unexpected windfall is possible because FTX said it recovered billions more dollars than initially anticipated to cover customer losses from its Nov. 2022 collapse.
FTX revealed it amassed roughly $15b, primarily from selling venture capital investments made by the exchange and its affiliate Alameda Research. This amount is enough to fully repay nearly all creditors with claims of $50,000 or less (representing 98% of creditors). The remaining creditors will also receive a significant recovery, with a minimum payout of 118% of their claims.
The defunct exchange’s proposed reorganization plan goes beyond simply repaying creditors.
The FTX Debtors today filed their anticipated amended Plan of Reorganization and accompanying Disclosure Statement with the U.S. Bankruptcy Court. Read about it here https://t.co/EGmlVdWOaS below: pic.twitter.com/bwwvRolX21
— FTX (@FTX_Official) May 7, 2024
The court filing reveals it also includes potential additional compensation to account for the time value of money lost since FTX’s bankruptcy. This means customers won’t just get their money back, they may also receive interest on it.
This payout to over 2m customers is a rare occurrence in typical US bankruptcy cases, where creditors often receive only a fraction of what they’re owed.
Some creditors, depending on their claim type, could see a return of up to 142% – meaning they get back more than they originally lost.
FTX’s payout plan is significantly better than initial expectations. Back in October, the company anticipated returning just 90% of
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