FTX's New Bankruptcy Plan Promises Over 100% Recovery for Creditors; Receives Mixed Reactions

By: Eliza Bennet

The insolvent cryptocurrency exchange, FTX, has proffered a revised reorganization proposal assuring substantial returns for its creditors. According to the new plan, creditors with claims less than $50,000 could expect a recovery of 118% within two months of its rubber-stamping by the Delaware bankruptcy court. Simultaneously, other non-governmental creditors would be reimbursed 100% of their claims along with an interest rate up to 9% to compensate for the time value of their investments.

Arrangements are being established to conclude claims with regulatory bodies such as the IRS, positioned to receive around $200 million, while negotiation amounts with the CFTC remain unknown. FTX has estimated that the total value of liquidated assets aimed for distribution will vary between $14.5 and $16.3 billion, achieved by liquidating a variety of assets, majorly proprietary investments from Alameda or FTX Ventures businesses and litigation claims.

Despite the promising offer, not all creditors are content with the proposed plan. Several have voiced their displeasure over the plan's inability to return stolen funds at contemporary market rates. Yet, some industry insiders have supported the plan, applauding its ethically correct direction irrespective of a full recovery of creditors' lost assets.