FTX Reveals Plan to Reimburse Creditors, Most Will Receive 118% of Claims

The cryptocurrency exchange FTX has announced a reorganization plan that aims to fully compensate its creditors. Surprisingly, most creditors stand to gain more than they initially lost.

In a late Tuesday court filing, FTX estimated its debt to creditors to be around $11.2 billion. However, it has managed to secure between $14.5 billion and $16.3 billion for distribution.

Key points:

• Creditors with claims of $50,000 or less will receive approximately 118% of their allowed claim amount.
• Nearly 98% of FTX’s creditors fall into this category.
• The reorganization plan still requires approval from the bankruptcy court.
• FTX raised funds by selling various assets, including venture investments and stakes held by Alameda, Sam Bankman-Fried’s crypto hedge fund.
• A significant portion of the funds came from the sale of FTX’s stake in artificial intelligence firm Anthropic.

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News comes as a relief to FTX customers

The news comes as a relief to FTX customers, whose funds have been locked up with the exchange since it filed for bankruptcy protection in November 2022. 

To raise the necessary funds for creditor compensation, FTX had to explore alternative avenues due to a significant amount of missing cryptocurrency from the exchange.  

One of the most notable investments that FTX leveraged to generate funds was its stake in Anthropic. The exchange sold most of its stake in Anthropic this year, yielding nearly $900 million in the process.

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Following the departure of Sam Bankman-Fried, FTX appointed John Ray III as its new CEO. In November 2022, Ray expressed his disbelief at the state of the company.

Despite the challenges faced by the exchange, Ray expressed his satisfaction with the company’s ability to propose a Chapter 11 plan that aims to return 100% of bankruptcy claim amounts plus interest for non-governmental creditors.