TLDR
FTX’s bankruptcy plan approved by US court
Creditors to receive 119% of approved claims in cash
FTT token surged 50% to $3.23, later settled at $2.72
Judge Dorsey confirmed FTT token has zero value
FTX plans to distribute $14.7-$16.5 billion to creditors
On Monday, a significant development occurred in the ongoing FTX bankruptcy case as U.S. Bankruptcy Judge John Dorsey approved the cryptocurrency exchange’s Chapter 11 reorganization plan.
This decision marks a crucial step towards resolving the nearly two-year-long saga that began with FTX’s collapse in November 2022.
The approved plan outlines a strategy to repay FTX’s creditors in full, utilizing approximately $16 billion in recovered assets.
According to the plan, 98% of creditors are set to receive about 119% of their approved claims within 60 days of the plan taking effect. This repayment includes the original amount owed plus interest.
The total funds available for distribution are estimated to be between $14.7 billion and $16.5 billion.
These funds have been amassed through various means, including the liquidation of FTX’s assets, contributions from international branches, and cooperation with government agencies.
John J. Ray III, the Chief Executive Officer and Chief Restructuring Officer of FTX, praised the efforts that led to this outcome.
He highlighted the hard work of the professional team that rebuilt FTX’s financial records and recovered billions of dollars in assets from around the world.
The approval of the bankruptcy plan had an immediate impact on FTX’s native token, FTT. Following the court decision, FTT’s value surged by over 50%, reaching $3.23. However, the price later settled at around $2.72, according to data from CoinGecko.
FTX Price on CoinGecko
It’s worth noting that despite this surge, Judge Dorsey stated in court that the FTT token currently has zero value.
The restructuring plan received strong support from creditors, with 94% voting in favor. These creditors represent approximately $6.83 billion in claims. The high approval rate likely contributed to the court’s decision to confirm the plan.
While the exact implementation date of the plan remains unspecified, Ray indicated that the estate is working with specialized agents to ensure safe and efficient distribution of funds to creditors across more than 200 jurisdictions. This global scope underscores the complexity of the repayment process.
The FTX bankruptcy case stems from the exchange’s collapse in late 2022, which sent shockwaves through the cryptocurrency industry.
Investigations revealed that the company had been misusing customer funds for risky investments, leading to criminal charges against key figures in the organization.
Former FTX CEO Sam Bankman-Fried was convicted on multiple counts of fraud and conspiracy, resulting in a 25-year prison sentence.
Bankman-Fried has since filed an appeal against his conviction. Other executives, including Caroline Ellison, the former CEO of Alameda Research (FTX’s sister company), have also faced legal consequences. Ellison received a two-year prison sentence and was ordered to forfeit $11 billion.
The approval of FTX’s bankruptcy plan represents a significant milestone in the crypto industry’s efforts to address the fallout from one of its largest failures.
It offers a path forward for creditors to recover their funds, potentially restoring some faith in the broader cryptocurrency ecosystem.
As the plan moves into its implementation phase, all eyes will be on the distribution process. The ability to successfully repay creditors could set an important precedent for how future cryptocurrency bankruptcies are handled.
The post FTX Creditors Set for 119% Claim Recovery Following Court Approval appeared first on Blockonomi.