Call it fate or luck, but most FTX customers and creditors will receive their money back after the firm filed for bankruptcy protection.
FTX, under the management of liquidators, said that 98% of FTX creditors would receive at least 118% of allowed claims. Other creditors will receive 100% of their funds along with accrued interest. Things could have been a lot worse.
FTX anticipates that the total value of property collected, converted to cash, and available for distribution will be between $14.5 and $16.3 billion. Most of the money will come from the sale of assets held by FTX Ventures and Alameda – the hedge fund owned by Sam Bankman Fried – the now-imprisoned founder and former CEO of FTX. The IRS will also get its cut of the action.
John J. Ray III, CEO and Chief Restructuring Officer of FTX, said they are pleased to be in a position to return of 100% of bankruptcy claim amounts plus interest for non-governmental creditors.
FTX posted an X outlining the plan.
The FTX Debtors today filed their anticipated amended Plan of Reorganization and accompanying Disclosure Statement with the U.S. Bankruptcy Court. Read about it here https://t.co/EGmlVdWOaS below: pic.twitter.com/bwwvRolX21
— FTX (@FTX_Official) May 7, 2024
The “Official Committee of Unsecured Creditors of FTX” commented on the plan, indicating they are yet to be a “supporting party.”
Relief for impacted individuals and firms is palpable. Bankruptcies rarely end in everyone getting their money back. Multiple asset managers acquired claims from impacted parties, and now they are poised to reap a decent return on their investments. WSJ.com reported that some customers sold their claims for pennies on the dollar – a move they certainly now regret. It appears the only losers in the outcome are former shareholders and holders of the FTX token. Of course, Bankman-Fried is cooling in the slammer for up to 25 years.
