FTX’s upcoming huge compensation of US$16 billion is considered an important buying force to boost the crypto market. Recently, the FTX restructuring plan has entered the voting stage. This article, PANews, has compiled the key information of key points in compensation, claim objects and compensation plans, etc. that are of concern to creditors.
Recently, the FTX Unsecured Creditors Official Committee (UCC) issued a document on the X platform stating that FTX debtors are sending solicitations to customers and creditors through Kroll. and ballots to vote on the Customer Claims Plan. The deadline for this voting plan is 05:00 on August 17th, Beijing time. The voting results will be announced 7 days before the hearing. The proposed date for the confirmation hearing will be 23:00 on October 7th, Beijing time.
These creditors are mainly divided into three types, namely "with voting rights", "without voting rights but deemed to accept the plan" and "without voting rights but deemed to have rejected the plan". Specifically, users who hold fiat currencies or cryptocurrencies other than FTT will have the right to vote. Holding only FTT/NFT will be deemed to have rejected the plan and will not have the right to vote. It is divided into different categories according to the compensation entity, amount and type, most of which are Class 5A, Class 7A and Class 13-18 categories.
Among them, Class 5A are FTX.com customers whose claims are worth more than US$50,000; Class 7A are FTX.com customers whose claims are worth less than US$50,000; Class 13-18 are unable to obtain any claims and have no right to participate in voting. Includes equity interests, FTT and small claims holders.
Both Category 5A and Category 7A FTX.com customers can choose to submit their claims to FTX DM in the Bahamas liquidation process or through the United States, but users can only obtain compensation from one of the procedures, and the decision cannot be revoked or changed. . Regardless of which process a creditor chooses to make a claim, they will receive roughly the same return at the same time, provided the plan is effective and all customer KYC, AML and tax reporting requirements are met.
But both compensation processes have their own advantages. For example, FTT/small claims holdings that are not supported by the United States may be able to obtain claims in the Bahamas process. The liquidation and reorganization case led by John Ray in the United States controls most of FTX’s assets and compensation The likelihood is higher.
In addition, in terms of taxation, non-US creditors will not be affected by the US 30% withholding tax. According to documents disclosed, the Ad Hoc Committee for Non-U.S. Customers composed of international creditors represents more than 31 countries around the world and has more than 60 members. As of June 28, 2024, the Commission held a total of approximately $4.5 billion in claims from Dotcom customers (customers who use the FTX.com exchange).
If the bankruptcy protection plan is approved, all FTX.com customers are expected to receive full payment, with claims expected to receive 119 to 143 cents per dollar , and post-petition interest on unpaid claims at a consensus rate of 9% from the filing date to the applicable distribution date. The first interim dividend distribution is expected to be paid in late 2024 or early 2025, according to a claims user guide issued by PwC, the joint official liquidator of FTX.
Among them, 119% of Category 7A claims are expected to receive one-time compensation within 60 days, accounting for 98% of the creditors; the recovery amount of Category 5A claims is expected to be between 129% and 143%, but full compensation will be paid and the residual value obtained through distributions from the Supplementary Relief Fund after payment of claimed interest, which is expected to be funded by recoveries that would have been payable to holders of senior subordinated government debt. Judging from the rules, compared to category 7A, compensation for category 5A will be carried out in multiple stages, and the specific time is not clear, but they can also obtain convenient claims by agreeing to reduce the claim amount to less than $50,000.
The order of payment is also crucial to the interests of creditors. Previously, due to objections from creditors, the IRS pushed US$685 million of the US$885 million claim to be paid after the customer was fully repaid. Recently, FTX reached a settlement with the U.S. Commodity Futures Trading Commission (CFTC). The $4 billion claim was ranked after creditors and interest. The amount paid to the CFTC will be transferred to the Supplementary Relief Fund to compensate severely damaged cryptocurrency holders. Yes (only payable if funds are available).
And in terms of the form of compensation, FTX creditors previously said that cash repayment will cause customers to pay taxes on the cash received, and they prefer to receive distributions in the form of stablecoins rather than cash. In response, the UCC stated that the committee will urge debtors to make stablecoin options available to as many creditors as possible.
UCC believes that although the restructuring plan is not perfect, it is the best plan to maximize compensation for creditors. If a Chapter 11 reorganization is converted to a Chapter 7 liquidation due to creditor objections, they will face lower recovery amounts, longer recovery times, and increased litigation costs, so the Committee encourages creditors to vote in favor of the plan.
The above is the detailed content of FTX compensation is imminent: the claim process must be selected before mid-August, and creditors with claims less than $50,000 can receive a one-time repayment. For more information, please follow other related articles on the PHP Chinese website!
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