A revised plan has been introduced by FTX, which is aimed at returning over 90% of the creditor holdings that the bankrupt crypto exchange held before its collapse last year in November.
A statement on Monday revealed that the debtors’ group that is overseeing the crypto exchange’s bankruptcy process would file the proposal by December 16th with a US Bankruptcy Court.
The disbursement
The statement said that customers of both FTX.US and FTX.com would collectively receive more than 90% of the value globally.
This would happen in the event that the Bankruptcy Court gives approval for the plan and the disbursement would take place by the second quarter of next year.
The estimated value for FTX.com is $8.9 billion, while it is $166 million for FTX.US. John J. Ray III, the CEO of FTX, and the head of FTX Debtors, commented on the proposed settlement.
He stated that it was a big milestone in their case. He said that the debtors and creditors had started together in one of the biggest financial challenges he had ever come across.
The CEO went on to say that the situation could have turned out to be a complete net loss for customers, but they had managed to create an enormous value from it.
The plan
An important component of the plan is to potentially exclude customers, affiliates, or insiders, who may have been aware of the misuse and commingling of corporate funds and customer deposits.
Likewise, people who changed their Know Your Customer (KYC) information for facilitating withdrawals when FTX halted its operations would also be excluded.
According to the proposal, the payouts for these individuals might not be a reflection of the fair value of the claims of FTX Debtors.
The plan dictates that taking the circumstances of the beginning of the bankruptcy into account, the missing customer funds should be divided into three separate categories.
One pool is for the assets set aside for customers of FTX.US, another is for assets for FTX.com customers and the third one is a ‘General Pool’ created for other miscellaneous assets.
The settlements
There will not be any reduction in the payment or claim of customers of the exchange who have a preference settlement of less than $250,000.
The preference settlement refers to 15% of the customer withdrawals that were conducted nine days before the exchange collapsed.
A ‘Shortfall Claim’ would also be given to creditors against the General Pool, which refers to a portion of losses that are not covered by insurance or any other contractual agreement.
However, the amended plan did say that FTX Debtors are aware that customers of both the exchanges will not be fully paid and FTX.com customers were likely to suffer from a greater percentage of losses.
This is due to the fact that customers of FTX.US and FTX.com have property interests in specific assets instead of an unsecured claim that ranks them equally with general creditors.
Therefore, the shortfall settlement is aimed at resolving this dispute in order to ensure all customers have a claim.