The FTX Bankruptcy Saga Progresses with some Hope for Creditors. Sunil, an FTX creditor, posted on X that the joint official liquidators of FTX Digital Markets extended deadline for submitting proof of debt. The original date was May 15th, but now it has gone on to the end of July or the beginning of August.
This extension gives clients a window of 10-12 additional weeks to settle the claims within the Bahamas procedure. However, the company allows participation in the Bahamas or US procedure, but not simultaneously. A comprehensive disclosure document, slated for release in June, will outline the implications of each choice in detail. Following its publication, customers will have a period of 6-8 weeks to consider their options and make an informed decision.
Extended Deadline Enhances FTX Transparency Efforts
A decision to extend the deadline and issue a comprehensive disclosure document reflects a commitment to transparency and choice for FTX customers. Although the claim processes might be different in both the Bahamas and the US, the expected distribution will proceed at the same pace. This initiative alleviates anxieties and allows customers to make the best possible decisions for their financial recovery.
In addition, the company recently proposed a reorganization plan that promises a major payoff for creditors. According to the filing, FTX will refund 118% of the outstanding claims to 98% of the creditors with cash payment upon the court’s approval within 60 days. The reorganization plan also guarantees full repayment for non-governmental claims and offers a 9% compensation for their time value.
However, some raised questions regarding this payment, especially accounting for the revival of the cryptocurrency market after FTX’s collapse. Many investors have expressed the frustration at missing out on potential gains while their funds are tied up in bankruptcy proceedings. However, the FTX estate insists that the market recovery is not the main cause of the proposed lump sum.
The next few months are critical for FTX. The success of the reorganization plan rests on court approval. The extension and the proposed payout for the creditors allow them to regain their losses and possibly to recoup their initial investment. However, caution is required since the outcome of the restructuring process and the court decision are still unclear.
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