As part of newly disclosed provisions, debtors responsible for collapsed cryptocurrency exchange FTX will secure up to $230 million in government forfeiture proceedings for preferred shareholders.
The agreement, disclosed in a recent filing, comes as a surprise to creditors who have traditionally been paid off before shareholders in bankruptcy proceedings and were unaware of the provisions when they overwhelmingly voted to approve the plan before the Aug. 16 voting deadline. It was work.
“No comments were made by general creditors,” said Sunil Kavuri, head of FTX’s largest creditor group. “FTX customers who follow me have told me they feel like they have been scammed and robbed by real estate again.”
As part of the agreement, FTX Debtors’ Estate, led by attorneys for Sullivan and Cromwell, will donate 18% of all proceeds from government forfeiture actions to a special fund for the “exclusive benefit” of certain shareholders. gun. The agreement was officially implemented on August 28, almost two weeks after the deadline for creditors to vote on the plan, but the agreement was not made public until September 27. This was the 30th and final day for estates to submit revised plans. contract.
“The Debtors and Preferred Stockholders each have an interest in avoiding the costs, expenses and delays associated with litigation related to the Scheme and forfeited proceeds,” the claim states. FTX Assets did not immediately respond to The Block’s request for comment.
FTX Assets estimated its proceeds from the forfeiture action in a June filing. Approximately $626 million was seized from Emergent entities used to purchase shares of Robinhood, totaling approximately $379 million in digital assets “secured in certain accounts on third-party cryptocurrency exchanges.” (As of June) “approximately $150 million in cash seized from accounts registered in the name of FTX DM” and “two private airplanes purchased using approximately $35 million in real estate assets.”
Adding this together, the current value as of June is approximately $1.19 billion, of which 18% is $214.2 million, which is within a reasonable range of $230 million proposed in the agreement. The plan also provides that each shareholder may receive up to $250,000 in legal fees, to be paid through segregated funds.
Under the FTX bankruptcy plan, which received “overwhelming proactive support” from creditors, 98% of creditors will receive at least 118% of their claims in cash, according to an FTX press release. However, Kavuri argued that since bankruptcy claims were assessed based on the value of the cryptocurrency involved at the time, creditors would actually get back “something like 10 to 25 percent of the cryptocurrency.”
For example, when FTX went bankrupt, the price of Bitcoin was around $16,000 and has since risen to nearly $66,000. According to the plan, creditors who fail 1 
BTC
-1.65%
In bankruptcy, you will only receive $16,000, which is approximately 24% of the value you would have received if your claims had been repaid in kind (with original assets rather than cash equivalents).
While the SEC previously warned FTX that it could face legal challenges from the agency if it repays creditors in stablecoins or other “crypto asset securities,” bankruptcy plans for other cryptocurrency companies, including Genesis and BlockFi, have left some in-kind. Reimbursement was provided.
A confirmation hearing for FTX’s plan of reorganization, at which Judge John Dorsey of the U.S. Bankruptcy Court for the District of Delaware will decide whether to approve it, is currently scheduled for October 7 at 10 a.m. FTX Estates is required by law to report the full results of the creditor vote by September 30, seven days before the hearing, which is also the deadline for the estate to file responses to objections to the plan supporting confirmation of the plan.
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