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Our subject today is a newly announced plan by FTX’s chief restructuring officer that aims to reimburse creditors 118% of their losses.
The FTX restructuring team has proposed a new plan for compensating creditors who lost their funds, however, not everyone is happy despite proposing as much as $16.3 billion in refunds. According to FTX, this sum aims to compensate creditors in addition to the lost time value of their investment.
The presently bankrupt exchange stated on 7th May their plan was subject to approval by the U.S Bankruptcy Court in Delaware District.
However, FTX said only creditors clutching onto claims under $50,000 are in for a treat—a whopping 118% recovery! This fabulous opportunity, however, graces only those fortunate enough to have modest claims, which the exchange believes is at most“98% of FTX creditors.” So, the vast majority of creditors can practically hear the money bells ringing, as long as their slice of the financial disaster pie doesn’t get too hefty. Lucky them, right?
2022’s Prices are Incomparable to Current Prices: 2024 is a Bull Run Remember!?
FTX’s plan is a real gem, isn’t it? You would have thought yes but pundits see it as the worst reimbursement plan in history. One of the reasons for this is that FTX seems to be generously offering to repay creditors based on the bargain-bin prices of November 2022 instead of today’s rates. It’s as if they are saying, “Why give you the fresh value of today when you can have yesterday’s leftovers?” The problem is that the creditors are not a bit pleased by the nostalgic touch, besides they are not in for a treat of reminiscing the good ol’ bankruptcy days while trying to squeeze every last drop of retro value from their “reimbursement.”
Bitcoin was 280% down when FTX went down. This means creditor’s funds have soared up with the current prices at the height of 2024’s bull market.
As per John J. Ray III, the chief restructuring officer who took over as FTX CEO to help recover every “recoverable” cent lost by FTX told stakeholders that they were now in a better position to put forward a Chapter 11 plan that will refund 118% of all bankruptcy claims, including interest incurred over the years for non-governmental creditors. According to the plans, the proposed repayment period will occur within 2 months after the announcement of an effective date for kicking off the reimbursements.
Some industry experts have voiced concerns about the proposal, noting that creditors won’t recover their total stolen funds at current market values.
More Info:
- FTX and Alameda Research Transfer $10.8M to Binance, Coinbase, and Wintermute
- Can FTX Rise from the Ashes? New CEO John Ray III Hints It Might!
- Pantera Capital Aims for a $1 Billion Blockchain Fund and Targets SOL Token Acquisition
The CEO of BitGo, Mike Belshe wrote on X that ‘While I understand the bankruptcy process, let’s not pretend that victims are fully recouping their losses,’
The FTX implosion, which happened in November 2022, exposed significant financial issues, including an $8 billion shortfall. This financial gap has been a focal point for the new management team as they strive to recover funds for creditors and customers. Investigations into the causes of the collapse and efforts to recover assets are still ongoing. As part of those efforts is an $884 million sale of shares belonging to Anthropic, an artificial intelligence firm in which FTX acquired a significant stake.
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