FTX Creditors And Debtors’ Latest Dispute Overshadows Reorganization Plan

FTX Debtors under chief restructuring officer John J. Ray III criticized traders and market makers among the Official Committee of Unsecured Creditors (UCC) for seeking control over assets. FTX debtors call the UCC’s plan to invest nearly $2.6 billion in cash reserves in short-term Treasuries a bad idea amid FTX 2.0 draft restructuring plan.

FTX Hits Back At Creditors For Seeking Control Over Assets

According to a filing in the court on August 9, FTX responded to a statement by the UCC in response to the draft plan of reorganization and term sheet. FTX blasted the UCC for seeking control over debtors’ assets after it called on debtors to invest nearly $2.6 billion cash reserves in short-term Treasuries to offset professional fees of up to $330 million.

Disputes arise between the UCC and debtors as creditors allege a lack of consultation and FTX losing most funds amid the bankruptcy filing. However, SEC is frustrated about lack of involvement and unprofessional conduct from many members of the UCC.

“The Debtors hope that the members of the Committee will constructively engage in these negotiations and actually sit down in person alongside the Ad Hoc Committee, customers and stakeholders holding other views in an effort to achieve the optimal result for all those impacted by FTX’s fall.”

FTX’s reorganization team has recovered about $7 billion in liquid assets from $8.7 billion the exchange owed customers when it filed for bankruptcy.

Some creditors and experts responded to the latest filing by the FTX, arguing that debtors are delaying the restructuring and rejecting statements from UCC.

1/13 FTX Docket: Debtor Responds to UCC

TL;DR: I read it, you shouldn’t bother reading it.

In my opinion, these are the worst Debtor Professionals I’ve seen in my professional career.

— Mr. Purple 🛡️ (@MrPurple_DJ) August 10, 2023

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FTX 2.0 Launch

Debtors revealed a plan for FTX 2.0 relaunch, with FTX CEO John Ray seeking the completion of all settlements and pending wages to launch FTX 2.0. Kraken CEO Jesse Powell believes FTX 2.0 is “worse than starting from scratch,” pointing to the absence of a team, technology, and licenses, as well as a tarnished brand.

Meanwhile, FTX filed a motion to dismiss the Chapter 11 bankruptcy case of FTX Exchange FZE (FTX Dubai), claiming that the exchange never started offering crypto-related services to investors.

Also Read: Lawyer Says US SEC Challenging XRP ODL Sales Is A Big Concern For Ripple

Varinder has 10 years of experience in the Fintech sector, with over 5 years dedicated to blockchain, crypto, and Web3 developments. Being a technology enthusiast and analytical thinker, he has shared his knowledge of disruptive technologies in over 5000+ news, articles, and papers. With CoinGape Media, Varinder believes in the huge potential of these innovative future technologies. He is currently covering all the latest updates and developments in the crypto industry.

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