FTX to Distribute Over $5 Billion to Creditors on May 30

By: Eliza Bennet

FTX Recovery Trust has announced plans to distribute more than $5 billion to creditors starting on May 30 as part of their Chapter 11 Plan of Reorganization. This move represents the second significant distribution round since the company entered bankruptcy proceedings. The recovery initiative is being managed by designated Distribution Service Providers, including BitGo and Kraken, ensuring that eligible claimants receive their payments within one to three business days of the release date.

John J. Ray III, the FTX Recovery Trust Plan Administrator, highlighted the distribution as a crucial milestone in executing what is considered one of the most complex creditor payment operations. The breadth of the creditor base poses a unique challenge that requires precise execution of large-scale coordination efforts. The continued efforts of professional recovery teams have been credited with effectively navigating these complexities, ensuring a steady recovery process for affected users.

In the latest payout, five different classes of creditors will receive distributions ranging from 54% to 120% under the reorganization plan's payment hierarchy. A total of $16 billion is earmarked for creditor repayments, and the initial phase aimed to fully reimburse smaller creditors whose claims were under $50,000, along with an annual interest rate of 9% accrued since the bankruptcy filing in November 2022. Future payment schedules for creditors with larger claims will be announced as the process continues, marking one of the most extensive repayment efforts in recent history.

Even as some creditors have expressed frustration with the wait involved, the estate's recovery reflects better-than-expected outcomes, allowing for broader and deeper repayment initiatives. The reorganization aims to provide a comprehensive solution to ensure that creditors are compensated and to restore confidence among users who have been left without access to their funds.