FTX Recovers Billions More Than It Owes Creditors, But Repayment Plan Still Faces Controversy

Updated: 08 May 2024

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Collapsed crypto exchange FTX says it has billions of dollars more than is needed to repay creditors affected by its downfall.

FTX forecasts that the total value of recovered assets will be between $14.5 and $16.3 billion, it said in a May 7 statement. That is more than enough to cover the firm’s debts, which stand at approximately $11 billion.

Many Creditors Could Receive 118% Of Their Claimed Amounts

“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,” said John Ray, FTX’s new chief executive.

The company’s repayment plan still needs approval by a bankruptcy court.

Creditors holding claims of $50,000 or less, amounting to about 98% of the total, would receive approximately 118% of the amount of their allowed claims within 60 days after the effective date of the repayment plan, FTX said.

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

FTX Repayment Deal Based on 2022 Prices Is Controversial

There is some controversy surrounding the proposed repayment plan, since it will reimburse creditors for their assets at the time of the FTX collapse in November 2022. Many creditors argue that their reimbursements should be based on current prices instead.

The crypto market has seen a resurgence since FTX’s downfall, with the market leader Bitcoin (BTC) surging nearly 280%.

“I understand why the bankruptcy process needs to work this way but let’s not pretend victims are getting their money back,” BitGo CEO Mike Belshe said in a May 8 post on X.

My lawyers Moskowitz and Boies that represent FTX creditors in MDL filed an objection to Debtors motion to estimate claims at petition

Fighting for FTX creditors to maximise recovery for FTX creditors

We may commence our adversary proceeding for property rights as unresolved pic.twitter.com/kBx8KWyScU

— Sunil (FTX Creditor Champion) (@sunil_trades) January 12, 2024

FTX creditor Sunil Kavuri said in a Jan. 12 post on X that his lawyers objected to the debtor’s motions to estimate claims based on November 2022 prices. His lawyers argued that customers should receive “at least the value of crypto back.”