FTX customers may receive a 9B deficiency claim payment in mid-2024.
Clients of bankrupt crypto exchanges FTX and FTX.US could see more than 90% of their assets recovered by the end of the second quarter of 2024 after a proposed settlement between FTX's creditors and debtors.
On Oct. 17, the FTX debtors said they had reached a “major milestone” in their Chapter 11 case after extensive discussions with “a committee of undisclosed creditors, a committee of non-US customers and class action plaintiffs regarding customer asset disputes.”
The FTX Debtors filed a Notice of Settlement with the Delaware-based U.S. Bankruptcy Court on October 16 (for informational purposes). However, they have until December 16 to file a formal application seeking the court's approval.
(1/4) FTX Debtors Announce Another Milestone in Their Chapter 11 Cases
— FTX (@FTX_Official) October 17, 2023
Part of the revised plan includes a “short failure claim” in which FTX's creditors assume that customers of FTX.com and FTX.US will jointly receive 90% of the distributable assets.
The shortfall claims are estimated at $8.9 billion for FTX.com and $166 million for FTX.US. If approved by the bankruptcy court, FTX expects these funds to be repaid by the end of the second quarter of 2024.
FTX CEO and Chief Structuring Officer John J. Ray III was pleased with the terms of the deal.
“Since the most challenging financial crisis I've ever seen, borrowers and lenders have created tremendous value from what could easily have been a total loss for customers.”
The revised plan involves dividing FTX's assets into three pools – assets for FTX.com customers, US customers and a collection of other assets. However, only the first two groups are included in the shortage claim.
The Schedule Schedule is an agreement between the Committee, borrowers, Interim Creditor Committee and other representatives of US and foreign borrowers balancing the rights of client and non-client creditors.
— Official Committee of Unsecured Creditors of FTX (@FTX_Committee) October 17, 2023
However, FTX's creditors estimate that customers of both exchanges will not be paid in full and that FTX.com will see a high percentage of losses.
FTX client clave
Meanwhile, observers noted that under the proposed scheme, customers who withdraw more than $250,000 from the exchange within 9 days of losses will have their claims reduced by 15%.
However, claims under $250,000 will not be reduced, FTX Debtors explained.
“Eligible customers with an interest settlement amount of less than $250,000 during the nine-day period may receive the payment without any claim or fee deduction.”
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However, as part of the revised plan, FTX said it could deport any insiders, affiliates and clients with knowledge of the commingling and misappropriation of customer deposits and corporate funds.
Former FTX CEO Sam Bankman-Fried has been on trial for two weeks in a fraud trial over his involvement in FTX's collapse and bankruptcy last November.
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