FTX plans to pay billions more to creditors for compensation
Creditors with claims below $50,000 will receive a 118% compensation, according to FTX’s new compensation plan. The plan is still subject to court approval.
“We are pleased to be in a position to propose a chapter 11 plan that contemplates the return of 100% of bankruptcy claim amounts plus interest for non-governmental creditors,” FTX CEO John J. Ray III said in the release .
The latest reorganization plan aims for a “centralized distribution” for FTX customers and creditors affected by the company’s collapse in 2022, regardless of where their assets were situated. FTX estimated the total value of cash available for distribution to be between $14.5 billion and $16.3 billion, while the plan has yet to be finalized and approved by the U.S. Bankruptcy Court.
Creditors with allowed claims below $50,000 will be eligible for the 118% compensation upon court approval, according to the plan. FTX’s proposal scheduled the repayment to occur within 60 days after the plan’s effective date.
The release stated that FTX monetized an “extraordinarily diverse collection” of assets, most of which were from investments held by Alameda and FTX Venture businesses, or litigation claims. As FTX held comparatively minimal portions of bitcoin and ether at the time of the collapse, debtors did not benefit from their recent surge in value.
The bankrupt FTX exchange was mired in illegitimate behind-door operations by its executives, which led to its liquidity crisis and ultimate demise. Former FTX CEO Sam Bankman-Fried was found guilty last November for all seven criminal counts of defrauding FTX customers and investors. Bankman-Fried received a prison sentence of nearly 25 years in March.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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