Under new CEO John Ray, FTX secures funds beyond debts, promising full repayments plus interest to creditors.
FTX, the exchange that faced a dramatic collapse in November 2022, has not only managed to secure enough funds to pay back its creditors but has also reported a surplus. This development is a rare occurrence in the realm of US bankruptcies, especially within the volatile cryptocurrency industry.
Under the new leadership of CEO John Ray, FTX has been able to gather billions more than what was initially needed to settle its debts. The company is now looking at a potential distribution of up to $16.3 billion after liquidating all its assets. This is in stark contrast to the $11 billion it owed to non-governmental creditors. This means that, unlike in most bankruptcy cases where creditors are left with pennies on the dollar, FTX's creditors could see a full repayment of their funds plus interest. However, it's important to note that equity holders in the company will not receive any part of this surplus.
The unexpected recovery of FTX's financial standing has been significantly boosted by the recent spike in cryptocurrency prices, alongside the strategic sale of assets. This has positioned the company to not only clear its debts but also to offer its creditors up to 142% of what they were originally owed. The majority of the creditors are expected to receive about 118% of their claims.
FTX has put forward a reorganization plan that promises nearly all of its creditors—98% to be precise—118% of their claims in cash, within 60 days of receiving court approval. This plan, which is still awaiting the green light from the Delaware bankruptcy court, also includes provisions for full repayment plus interest for other creditors. The estate has estimated that it will have between $14.5 to $16.3 billion available for distribution, funds that have been accumulated through the liquidation of assets across the globe. Additionally, the plan outlines settlements with the IRS and CFTC, ensuring that all users and investors are fully compensated, including interest.
