FTX submits revised reorganization plan: 98% of creditors are expected to receive recognized claims amount 118% of compensation

Early this morning, FTX Trading Ltd. (also known as FTX.com) and its affiliated debtors submitted an expected revised reorganization plan and related disclosure statement. The document disclosed the impact on global customers and other Distribution plan to creditors. Odaily will explain the key points and historical evolution of the document in this article.

Interpretation of Document Key Points

Creditor Compensation

The document states that 98% of FTX creditors will receive at least 118% of recognized creditor compensation in cash within 60 days after the plan takes effect. . Compared with the expected loss ratio of 93% - 97% one month ago, there is a further improvement. This group of creditors is classified in the document as a special "convenience type" for creditors holding claims in an allowed amount of $50,000 or less.

Other creditors will receive 100% compensation for their recognized claims and compensation for the time value of their investments. The document states that this part is worth billions of dollars (Billions in Compensation for the Time Value of Their Investments), with an annual interest rate of up to 9%.

Claims from government creditors will be classified as subordinated compensation to ensure that non-government creditors receive interest in full.

Asset Value

It is reported that FTX expects to collect and cash out the total assets available for distribution with a total value of approximately US$14.5 billion to US$16.3 billion, a large part of which will come from Alameda or FTX Ventures holdings. Some investment or litigation claims.

Since FTX filed for Chapter 11 bankruptcy in the District Court of Delaware on November 11, 2022, the value of its assets and claims has changed dramatically. The first Bid quotation was made around November 18, 2022. The value of the creditor's rights was only 6%-10% of the debt, and the transaction amount at that time was approximately US$1 million.

As of the end of March this year, 49 claims totaling over US$439 million had been traded on the major trading platform Claims Market. Meanwhile, hedge funds have bought more than $2.3 billion worth of deeply discounted debt, according to court records on March 20, with early buyers reaping huge profits.

On April 30, according to sources, SOL in FTX’s bankrupt assets has completed the second batch of sales at a price of about $100. Approximately 1.8 million SOL were sold in an auction transaction, worth approximately $232 million. The source said the bidding was completed on April 25, with bids to lock SOL ranging from $85 to $110, and claimed that bids of $95 and above were passed. Additionally, Pantera Capital purchased more locked SOL in a recent auction, Bloomberg reported, citing a person familiar with the matter. Earlier, Sullivan and Cromwell sold SOL originally worth $1.7 billion at a price of 64 USDT.

Currently, FTX still holds more than 40 million SOLs locked up, and the price changes of SOL still have a profound impact on the value of assets.

IRS Claim

In fact, at the end of April 2023, the United States Internal Revenue Service (IRS) filed a claim worth nearly US$44 billion against the assets of FTX and its affiliated entities, and compensation was prioritized at that time The creditors may even take priority over other creditors in bankruptcy cases, which once significantly suppressed the value of FTX’s claims.

According to the latest filings, the corresponding IRS claim has been converted into a $200 million cash payment and $685 million in subordinated claims, with a lower priority than all creditors and government entities.

Conclusion

Although most creditors can receive compensation exceeding 100% of the value of their claims, the calculation of claims is based on the token price when filing for bankruptcy in November 2022, and the relative losses are still large.

It is worth noting that the plan is not the final version and needs to be approved by the Bankruptcy Court (Subject to being finalized and approved by the Bankruptcy Court); once approved, most small creditors will receive the compensation. Odaily Planet Daily will also continue to pay attention to relevant trends.

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