Second Chance for FTX? Exchange Offers Full Repayment Plus Compensation to Creditors

• FTX plans to fully repay remaining creditors and compensate them for the time value of their investments, potentially leaving 98% of creditors with up to 118% of their permitted claims.
• The proposal is subject to approval by a Delaware bankruptcy court, marking a departure from FTX's previous plan to repay creditors the full value of their assets at the time of the company's bankruptcy.
• FTX projects a total property value of $14.5 to $16.3 billion to be distributed to creditors, with the 118% recovery only applicable to claims under $50,000, and repayment scheduled sixty days after the plan's initiation.

FTX intends to fully repay the remaining creditors plus pay them "billions in compensation for the time value of their investments," leaving 98% of its creditors with up to 118% of their permitted claims.

The insolvent cryptocurrency exchange stated on May 7 that the proposal was "subject to being finalized and approved" by a Delaware bankruptcy court. This is the opposite of FTX's previous plan, which called for paying creditors back the full value of their assets at the time of the company's bankruptcy in November 2022.

Since then, there has been a boom in the cryptocurrency markets, with Bitcoin increasing by almost 200%.

FTX projected that between $14.5 and $16.3 billion will be the entire value of the property gathered and turned into cash to be given to creditors.

If the court rules in favor of it, the 118% recovery will only be available to creditors with claims totaling less than $50,000.

The suggested payback would take place sixty days following the plan's start date.

FTX's Recovery Efforts

Following the collapse of the $32 billion cryptocurrency exchange in November 2022, its new management has been working to plug the $8 billion shortfall that was exposed.

One of those initiatives was the March $884 million sale of Anthropic's shares, which made up the bulk of FTX's ownership in the artificial intelligence company.

One of the biggest platforms by trading volume before it crashed, the cryptocurrency exchange will not be restarted, as FTX stated in January as part of its reorganization plans.

The FTX bankruptcy case serves as a cautionary tale for the cryptocurrency industry, highlighting the inherent risks associated with these volatile digital assets. However, the proposed revised repayment plan offers a glimmer of hope for creditors. If approved by the court and successfully executed, it could represent a significant recovery effort and a potential turning point for FTX. The coming months will be crucial as the court weighs the proposal and the complex process of asset liquidation unfolds.

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