FTX unveils a $16 billion repayment plan for its creditors

Cryptocurrency exchange FTX, which has been in bankruptcy since November 2022, has announced a new plan to fully reimburse its creditors and customers, while offering additional compensation for the time value of their investments.

FTX pledges to reimburse customers up to 118%

FTX has tabled a new reorganization strategy with the U.S. Bankruptcy Court for the District of Delaware, revealing its intention to reimburse 98% of its customers in cash for at least 118% of their authorized receivables.

This plan involves a centralized distribution of all the company’s assets at the time of its collapse in November 2022 to its creditors and customers.

The crypto exchange has managed to raise between $14.5 and $16.3 billionthrough the sale of company-owned assets and properties. These funds came in particular from assets under the control of “Chapter 11 debtors”, the official joint liquidators of FTX Digital Markets Ltd. and FTX Australia as well as various private parties involved in the recovery and repayment process.

Priority for non-government creditors and creation of a “convenience class”

The repayment strategy of FTX describes a comprehensive approach to repaying creditors, both governmental and non-governmental. Non-government creditors will be reimbursed in full according to the value of their claims as determined by the bankruptcy court.

For government creditors, a subordination agreement is proposed, giving priority to the payment of interest to the main categories of customers and creditors up to 9%, executed in due course.

The repayment plan also provides for the creation of a “convenience class”, intended for creditors with claims valued at $50,000 or less. This reorganization is designed to streamline the payment process for small creditors and speed up their compensation.

If FTX’s modified repayment plan is approved by the bankruptcy court, creditors should receive 118% of the value of their allowed claims within 60 days of the plan’s effective date. Several key settlements were disclosed, including the resolution of claims filed by the IRS, as well as agreements with the CFTC and the joint official liquidators of FTX Digital Markets, Ltd. and BlockFi.