FTX’s debtors, the Official Committee of Unsecured Creditors and “other creditor stakeholders” agreed to a reorganization plan late last week.
The debtors filed a disclosure statement and a reorganization plan with the bankruptcy court ahead of a 2024 hearing on the plan.
FTX filed for bankruptcy on Nov. 11, 2022. The plan, not yet approved, would have claims honored at the price that they were at in November 2022, meaning that a potential claim for bitcoin would be for $17,000 — the closing price of bitcoin in November 2022 — and not $41,000, where it currently stands.
There are twenty-three claim classes in the proposed plan. The voting deadline for claims will be around a month or so before the hearing date, which has yet to be set.
“Above all else, the goal of the Official Committee continues to be to maximize recoveries for unsecured creditors of FTX and expedite distributions,” the Official Committee of Unsecured Creditors of FTX posted on X.
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The plan is still up for revision, the OCC posted, adding that the documents will include “input from the Committee and other stakeholders, for events that occur and agreements reached between now and the date of the hearing to approve the Disclosure Statement.”
The FTX debtors announced in October a proposed settlement with customer property disputes, clearing the way for customers to receive around 90% of “Distributable Value Worldwide if Amended Plan is approved.”
“The Debtors believe that the Plan affords Holders of Claims and Interests the potential for the greatest recovery on those Claims and Interests and is therefore in the best interests of such Holders,” the disclosure statement said. However, if the plan is not confirmed either by vote or by the bankruptcy court, then “a likely alternative near-future outcome for the Debtors is the liquidation of the Debtors under chapter 7 of the Bankruptcy Code.”
FTX is currently in Chapter 11 bankruptcy, meaning that it’s permitted to reorganize, but a Chapter 7 bankruptcy would sell all assets to repay the creditors.
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The disclosure statement also warned that “there can be no assurance that the estimated Allowed amount of Claims in certain Classes will not be significantly more than projected, which, in turn, could cause the value of Distributions in one or more Classes to be reduced substantially.”
The bankruptcy court overseeing the case can confirm the plan so long as a class of creditors votes to accept the plan.
There is, however, another route that the debtors can take if there aren’t any acceptances. A “cram-down” could confirm the plan “so long as the Plan does not ‘discriminate unfairly’ and is ‘fair and equitable,’ for the purposes of the Bankruptcy Code, with respect to each Class of Claims or Interests on a substantively consolidated basis, that is Impaired under, and has not accepted, the Plan.”
FTX’s debtors are also pushing back against a $24 billion IRS claim, which they argued earlier this month could take “recoveries away from victims.”
“As there is no basis to assert any tax claim against the Debtors, the IRS’s reliance on its own processes only serves to delay distributions to those truly injured,” FTX argued in a Dec. 11 filing.
Ahead of the proposed plan, the debtors for FTX were approved to sell the bankrupt exchange’s digital assets back in September.
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Source: https://blockworks.co/news/ftx-files-restructuring-plan