FTX’s New Chapter 11 Plan Values Assets at Time of Bankruptcy

• FTX has filed a revised Chapter 11 plan. 
• The exchange added a provision that would value claimants’ assets in cash. 
• Creditors stand to lose millions in potential gains should the new plan receive approval. 

FTX’s spectacular downfall left a trail of unresolved financial chaos in its wake, leaving creditors and claimants in limbo as they still await a potential resolution after a year. 

While the exchange has declared plans to issue refunds by 2024 , an unexpected twist unfolds as FTX files a sneaky amendment to its reorganization plan, which could result in creditors losing millions on potential gains.

FTX’s Unwarranted Revision

On Saturday, December 16, The FTX Debtors’ estate, led by FTX CEO John Ray III, filed a revised Chapter 11 plan outlining how it will treat bankruptcy claims. 

In its revised reorganization plan, the exchange had added a provision that would value claimants’ digital assets in cash at the date of the bankruptcy filing, November 11, 2022. 

Considering the market has somewhat recovered from the aftermath of the FTX fiasco—successfully doubling its total market capitalization from $850 billion to $1.6 trillion at press time—the new plan could lead creditors to lose millions in potential gains, should it be approved. 

Bitcoin , Ethereum, Solana, and FTT have each gained over 100% since the exchange filed for bankruptcy in 2022, with Solana emerging as the top performer with gains exceeding 600%

Sunil Kavuri, a notable FTX creditor, argued that the organization plan contradicted the exchange’s Terms of Service, which stipulated that the titles to digital assets belonged to customers and not the exchange. 

FTX’s revised plan clarified that the amendment had yet to be finalized, and creditors belonging to certain classes would have to vote to approve the revisions. However, according to the filing, as long the solution is ‘fair and equitable,’ creditors who disagree with the plan could still be forced to accept it.

On the Flipside

• FTX debtors estimate that its customers would receive over 90% of distributable value worldwide if the Bankruptcy Court approves the amendment plan by the end of Q2 2024.
• FTX estate-linked wallet recently moved $32 million worth of Solana 

Why This Matters

FTX claimants have been waiting for over a year to become whole again. The new amendment could prevent them from receiving what’s rightfully theirs in exchange for an alternative.

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