The FTX Debtors estate, under the leadership of CEO John Ray III and legal representation from Sullivan & Cromwell, has submitted an amended Chapter 11 plan of reorganization. The document outlines the specific treatment of bankruptcy claims and introduces a provision that assesses claimants’ digital assets in cash based on their values at the time of the bankruptcy filing on Nov. 11, 2022.
A significant aspect of the plan is its potential impact on creditors, as it values digital assets at the time of the bankruptcy filing. This approach, if approved, could result in creditors missing out on potential gains, given the healthy recovery of the crypto market since FTX’s collapse. FTX’s native token has nearly doubled in value during this period.
Sunil Kavuri, an FTX creditor, argues that the reorganization plan contradicts FTX’s Terms of Service, which stipulated that digital assets were owned by customers, not the exchange. Kavuri contends that the plan could affect creditors adversely, particularly in light of the conviction of SBF on charges related to the alleged misappropriation of digital assets owned by FTX customers.
Creditors from specific classes will have the opportunity to vote on the amended reorganization plan, with the document highlighting the extensive compromises made to ensure an equitable outcome for all stakeholders. The plan sets various approval thresholds, both in terms of the dollar amount and the number of claimants. In certain scenarios, known as a “cram-down,” classes of creditors who did not agree to the plan may still be compelled to accept it if deemed “fair and equitable.” FTX did not provide an immediate response to The Block’s request for comment.
