FTX Founder Sam Bankman-Fried Spared Second Trial
The announcement came through a letter submitted to New York federal court on Friday.
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What's Going On? FTX Announces a Rare Move, Causing FTT Token to Surge Over 40%
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After several rounds of selling off assets and tokens, the restructuring team at bankrupt crypto exchange FTX announced that the total funds raised are sufficient to fully compensate creditors and customers for their losses in the collapse. Moreover, creditors will receive an additional payout, totaling a 118% cash repayment, expected to be disbursed as early as September.
According to FTX's statement, once all assets are sold, the company will have between $14.5 billion and $16.3 billion in cash available for distribution. It owes approximately $11 billion to customers and other non-government creditors.
Depending on the type of claim, some creditors may receive up to 142% of their loss compensation, while most customers (those holding claims under $50,000) will receive around 118% of their loss compensation.
The plan aims to fully pay the value of all non-government creditors' claims as determined by the bankruptcy court. The plan also considers subordinate arrangements with government creditors, allowing for up to 9% interest (consensus rate) to be paid to major classes of customers and creditors from the bankruptcy filing date to the effective date.
Some creditors may also have the opportunity to receive additional compensation through a supplementary relief fund outlined in section 1.F of the disclosure statement.
The compensation amount for creditor losses is calculated based on platform funds as of the day FTX filed for Chapter 11 bankruptcy.
FTX CEO John Ray stated that this is an incredible outcome for any bankruptcy case, as creditors generally receive only a small portion in past U.S. bankruptcy cases.
In a document filed Tuesday, the restructuring team provided new details on cash distribution to creditors and the conclusion of Chapter 11. Ninety-eight percent of creditors will receive 118% loss compensation within 60 days after court approval.
U.S. bankruptcy judge John Dorsey is expected to hold a hearing on the disclosure statement and voting process in late June.
This means that if all goes smoothly, creditors could start receiving compensation as early as September.
Despite the current downward trend in the crypto market, FTX's rare announcement caused the FTT token to surge, rising from $1.5922 to a peak of $2.27, an increase of over 40%, before settling slightly to $2.13.
Source: CoinmarketCap
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