The bankruptcy estate of FTX Trading Ltd, led by the CEO, John Ray III, and the lawyers of Sullivan & Cromwell, has submitted an amended reorganization plan for the distribution claims of the customers and creditors.
FTX Moves to End Its Bankruptcy
According to the reorganization plan submitted last Friday, the bankrupt exchange will repay billions of dollars to customers and creditors. Under the plan, the claimants’ digital assets would be valued in cash at the time of the date of the bankruptcy filing on 11 November 2022.
However, the plan did not detail how the claimants would receive the proceeds from the bankrupt exchange. It is also unclear if the FTX brand would restart its services as a cryptocurrency exchange.
“The Plan and this Disclosure Statement reflect many compromises to create the best, most equitable, and economical outcome for all creditors and stakeholders in these Chapter 11 Cases,” FTX's debtors said in a statement.
The plan will be sent for approval from the creditors, likely with more specific details, next year before it is sent for the court’s final approval.
FTX Put a Dent in Crypto
At its peak, FTX was the second-largest crypto exchange in terms of trading volume. However, the exchange collapsed overnight after the shady business practices of its Founder and former CEO, Sam Bankman-Fried, came to light. Bankman-Fried has been convicted of seven counts of criminal charges and is now awaiting his sentencing.
Meanwhile, the latest court filing of FTX revealed massive legal costs that are eating through the claims of the customers and creditors. Between 11 August and 31 October, the FTX bankruptcy lawyers have charged at least $118.1 million. The management consulting firm Alvarez and Marshall billed the most at $35.8 million for three months of services, followed by law firm Sullivan & Cromwell with a bill of $31.8 million.
Recently, the court granted FTX permission to sell approximately $873 million worth of assets held in trust. The bankrupt exchange is also offloading its subsidiaries and selling its crypto derivatives subsidiary LedgerX for $50 million earlier in the year.
