FTX compensation is imminent: less than a quarter of the compensation may be received, and shareholders jump the queue t

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Compiled by: Felix, PANews

Recently, the latest developments in the FTX bankruptcy case have sparked debate and panic among some people in the crypto community. First, creditors may only receive 10-15% of their assets, and shareholders forced to distribute $230 million in assets to creditors. Later, there were rumors that FTX will begin distributing repayment funds to creditors and customers on September 30. FTXs FTT token rose by more than 80% in 24 hours, reaching a high of $2.71 and is now trading at $2.14.

Newly revised bankruptcy documents spark outrage

Previously, according to the FTX bankruptcy plan that received overwhelming initial support from creditors, 98% of creditors will receive at least 118% of the value of their claims in cash.

However, on September 28, Sunil Kavuri, a representative of FTX creditors, disclosed the latest revised bankruptcy documents on the X platform. The refund amount is based on the value of the cryptocurrency when FTX submitted the application, so the creditors will actually receive a return of 10% to 25% of their cryptocurrency. For example, Bitcoin was only about $16,000 at the time.

This decision disappointed many creditors and even sparked anger among FTX creditors.

Sunil Kavuri claimed: The Debtors, the DOJ, and Judge Kaplan confirmed that cryptocurrency holders were not compensated as of the filing date. Many FTX users continue to suffer mental distress, panic attacks, divorce, and suicidal thoughts because their life savings were stolen and their property has not been returned.

The vast majority of FTX creditors agree with Kavuri’s view. One user said: “It’s disgusting that this was sneaked into the plan so late after the vote.” Another FTX creditor commented: “I don’t understand why the law can’t protect us investors,” and described FTX’s collapse as a scam. One FTX creditor commented: “Shameful, we were scammed twice.”

FTX to give shareholders $230 million from government forfeiture proceeds

To make matters more complicated, under a newly disclosed agreement , FTX Estate, led by attorneys Sullivan and Cromwell, will donate 18% of the proceeds from the government’s forfeiture action to a special fund for the “exclusive benefit” of certain shareholders, up to a total of $230 million. Although the agreement was formally executed on August 28, nearly two weeks after the deadline for creditors to vote on the plan, the agreement was not made public until September 27, which was also the last day the estate was allowed to submit a revised plan.

Many creditors called the move not only unfair but criminal given the huge financial losses they have suffered because creditors are typically paid before shareholders in bankruptcy proceedings and they were unaware of the provision when they voted overwhelmingly to approve the plan before an Aug. 16 voting deadline.

But the filing said: The debtors and preferred stockholders each wish to avoid the costs, expenses and delays of litigation related to the Plan and the disgorgement of proceeds.

FTXs repayment of funds will start on September 30th is a rumor

It is worth mentioning that there are even rumors on social media that FTX will start distributing repayment funds to creditors and customers on September 30. FTT tokens have risen sharply. However, after verification, it was found that the statement was a rumor because the repayment plan has not yet been approved by the court and needs to be confirmed by a hearing.

The confirmation hearing for FTXs restructuring plan is currently scheduled for 10:00 a.m. EST on October 7, when John Dorsey, a judge in the Delaware Bankruptcy Court, will decide whether to approve the plan. If the court confirms the plan, FTX will be allowed to pay more than 98% of its customers and unsecured creditors in full with interest based on the dollar price of crypto assets on November 11, 2022.

According to the disclosure of creditor representative Sunil Kavuri on the X platform, about $5.5 billion in claims come from non-crypto users who are not expected to invest in cryptocurrencies in the future. Claimants with claims of less than $50,000 may start receiving distributions by the end of 2024, while claimants with claims of more than $50,000 may not receive distributions until the first or second quarter of 2025.

This article is sourced from the internet: FTX compensation is imminent: less than a quarter of the compensation may be received, and shareholders jump the queue to distribute $230 million

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