TLDR
- FTX withdraws proposal to forfeit $800M in global customer claims.
- International creditors pressured FTX to reverse controversial plan.
- FTX’s withdrawal ensures customer claims stay active for repayment.
- Chinese creditors led opposition against FTX’s restricted claim plan.
- Creditors hope for quicker repayment process after FTX reverses plan.
FTX has withdrawn a controversial bankruptcy proposal that would have potentially forfeited $800 million in customer claims. This decision follows strong opposition from creditors worldwide, particularly those from China, who feared the plan would leave them without compensation.
Pressure from International Creditors Sparks Reversal
Initially, FTX sought approval from a U.S. bankruptcy court for a “Restricted Jurisdiction Procedure.” This plan intended to classify claims from 49 countries, including China, as “restricted” based on local laws or government restrictions. If a lawyer in those regions deemed the repayment process illegal, customers there would lose their right to compensation. This move drew sharp criticism, especially from international customers, who argued it was unfair to punish users due to their geographical location.
Global Opposition Prompts Action
The proposed plan quickly garnered pushback, especially from creditors in China. Weiwei Ji, an investor in Singapore, led a group of 300 Chinese claimants who filed an objection. They argued that FTX had no justification for including China in the restricted list. Their objection highlighted concerns that approving the plan would set a dangerous precedent, allowing other companies to deny payments based on location.
Faced with this backlash, FTX filed a formal withdrawal notice in the Delaware bankruptcy court, effectively canceling the proposed forfeiture plan. This reversal has been welcomed by creditors, as it ensures that customers will not lose their claims simply because of local laws.
Creditors Hope for Faster Repayment Process
The withdrawal of the plan also brought relief to creditors, who felt excluded from the decision-making process. They expressed hope that this move would speed up the distribution of remaining assets and expedite the repayment process. Many creditors now feel that their concerns are being addressed, with FTX focusing on repaying users.
As the company moves forward, attention will shift to the upcoming appeal hearing of FTX founder Sam Bankman-Fried. He plans to challenge his conviction for fraud, asserting that the company was not insolvent when it collapsed. However, the focus remains on how FTX will manage the distribution of funds and handle its bankruptcy proceedings.
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Source: https://blockonomi.com/ftx-withdraws-plan-to-forfeit-800-million-in-customer-claims/