Key Takeaways
- Shortfall claim is expected to be $8.9 Bon for FTX. com
- Assets will be divided into assets segregated for the benefit of FTX. com users, US customers, and general pool
In a significant development for FTX and FTX US customers, a proposed settlement could potentially see more than 90% of their assets returned by the second quarter of 2024. This outcome follows extensive discussions between FTX debtors, the unsecured creditors’ committee, non-US customers, and class action plaintiffs regarding customer property disputes in their Chapter 11 case.
The proposed “Customer Shortfall Settlement” will be included in an Amended Plan of Reorganization, to be filed by the FTX Debtors by December 16, 2023. If approved by the Bankruptcy Court, this settlement would resolve the ongoing customer property litigation, allowing confirmation of the Amended Plan in the second quarter of 2024.
The heart of this plan includes the “Shortfall Claim,” which estimates that customers of FTX.com and FTX US could collectively receive about 90% of the available assets. This is divided into approximately $8.9 billion for FTX.com and $166 million for FTX US, with the expectation that these funds will be distributed by the end of Q2 2024.
John J. Ray III, CEO and chief restructuring officer of FTX, expressed satisfaction with the settlement’s terms, emphasizing the value created from a challenging financial situation that could have resulted in substantial losses for customers.
The amended plan outlines three asset pools, two of which pertain to FTX.com and FTX US customers, and the third for general assets. However, it’s important to note that not all customers are guaranteed full payment, and FTX.com customers may bear a larger percentage of losses.
One noteworthy aspect of the plan concerns customer clawbacks, where customers who withdrew over $250,000 within nine days of the bankruptcy may see their claims reduced by 15%. Claims under $250,000, however, would not face such reductions.
Additionally, FTX may exclude insiders, affiliates, and customers who had knowledge of the commingling and misuse of customer deposits and corporate funds from the settlement.
These developments unfold in the context of a former member of Sam Bankman-Fried’s inner circle at FTX confessing that he was aware FTX customer money was directed to Bankman-Fried’s crypto trading firm.
