A U.S. judge has given the green light to FTX‘s bankruptcy strategy, following the company’s collapse two years back due to mismanagement by Sam Bankfriedman’s leadership team.
During a hearing on Monday, Judge John Dorsey approved the plan to begin paying back creditors. Under this plan, 98% of creditors will receive at least 118% of what they claimed in cash.
Judge Dorsey lauded the case as an exemplary model of managing a complex bankruptcy situation. FTX anticipates that the funds available for distribution will range from $14.7 billion to $16.5 billion.
This includes assets managed by FTX and other cooperating parties involved in the recovery process. The exact date for the plan to take effect and when creditors will start getting paid will be announced later.
John J. Ray III, CEO of FTX stated that the court’s approval of their plan marks a significant step toward returning funds to customers and creditors. He attributed this achievement to the diligent efforts of their professional team, who recovered billions by reconstructing FTX’s records and gathering assets globally.
Ray highlighted the importance of their collaboration with various governments and agencies in addressing the misconduct of those involved with FTX.
He stated their goal is to return all money owed to creditors, along with interest, in what is set to be the largest and most complex bankruptcy asset distribution ever. They are working on setting up payments to creditors in over 200 locations worldwide.
In other news, Prager Metis, the auditor for FTX, faces a $745K penalty due to oversight in their audits
To facilitate this, they are partnering with experts to ensure a swift and secure return of funds to customers. He also expressed gratitude to all FTX customers and creditors for their patience throughout this process.
Sunil Kavuri, representing FTX’s largest creditor group, criticized the plan, arguing that the estate should compensate creditors in cryptocurrency rather than cash based on its value at the time FTX filed for bankruptcy in 2022. David Adler, another lawyer for some creditors, contended that cash payouts would lead to significant tax liabilities for creditors.
FTX contemplated a relaunch as “FTX 2.0,” but it never materialized. In June 2022, CEO John J. Ray III announced they were seeking investors to revive the exchange. By January, however, lawyer Andrew Dietderich informed the court that no investors were willing to support the relaunch.
