FTX Bankruptcy Plan Aims for $14.5 Billion-$16.3 Billion Distribution to Creditors

Embattled cryptocurrency exchange FTX has filed an amended reorganization plan in a U.S. bankruptcy court, outlining a potential payout of $14.5 billion to $16.3 billion for creditors and customers.

According to the plan, unveiled on May 7th, FTX anticipates this figure will be generated through the monetization of various assets. These assets primarily comprise investments held by Alameda Research (a crypto hedge fund formerly controlled by Sam Bankman-Fried), FTX Ventures businesses, and potential settlements from ongoing litigation.

The distribution amount encompasses assets controlled by FTX itself under Chapter 11 bankruptcy, as well as those held by liquidators of FTX Bahamas Digital Markets, the Bahamas Securities Commission, FTX’s Australian unit, the U.S. Department of Justice, and various private parties.

The amended plan emphasizes a series of consensual settlements reached with key stakeholders, including cases still awaiting court approval. Notably, the plan proposes a “convenience class” specifically for creditors with claims of $50,000 or less. Under this class, a projected majority of creditors could receive approximately 118% of their claims within two months of court approval.

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“We’re encouraged by the possibility of proposing a Chapter 11 plan that envisions the return of 100% of bankruptcy claim amounts, plus interest, for non-governmental creditors,” stated John Ray, CEO of FTX.

It’s important to note that in February, FTX reported having only $6.4 billion in cash reserves. Additionally, the earlier mention of a 25-year prison sentence for Sam Bankman-Fried appears to be inaccurate and has been removed.

The FTX collapse, which unfolded in November 2022, sent shockwaves through the cryptocurrency industry. Once a leading crypto exchange, FTX’s bankruptcy left an estimated 9 million customers and investors facing significant financial losses. This amended reorganization plan, if approved by the court, could offer some measure of recovery for those affected.