FTX customers to vote on bankruptcy repayment plan

A U.S. judge has approved FTX’s plan to survey creditors about Chapter 11 repayment.

FTX users will soon have the opportunity to vote on a proposed multibillion-dollar plan to refund people whose funds have been trapped in FTX since its collapse.

Judge John Dorsey of the District of Delaware allows FTX advisors to seek client votes on Chapter 11 plans. If approved, the plan would refund customers and address government fines related to the collapse of Sam Bankman-Fried’s crypto business.

Pay back

Creditors have the power to influence restructurings through a Chapter 11 vote, and while FTX’s plan is supported by key committees representing customer interests, there is opposition from a vocal union demanding major changes.

According to Bloomberg, the majority of FTX clients will receive 119% of their assets on the day the company files for Chapter 11 in November 2022. Court documents suggest other creditors could recover up to 143% of the amounts owed.

FTX’s legal team argued that bankruptcy legislation only allows them to repay funds based on the cost of assets as of 2022, despite the rise in cryptocurrency prices since then.

The company plans to use cryptocurrency prices from November 2022, when it declares bankruptcy, as the basis for refunds. In other words, if a client had held one Bitcoin (BTC) during the FTX crash, they would have received a refund worth roughly $16,800; This is significantly lower than Bitcoin’s current value of around $61,000.

FTX claims to have recovered $16 billion in assets, including $12 billion in cash, enough to fully repay all customer claims based on 2022 prices.

In addition to all this, FTX will pay $200 million to the Internal Revenue Service for priority claims.