Bankrupt FTX is preparing for creditors to vote on a reorganization plan following the cryptocurrency exchange’s disastrous collapse nearly two years ago.
At Tuesday’s bankruptcy hearing, FTX lawyers and creditors discussed the disclosure statement, a document that would give creditors more information to make decisions about the exchange’s plan to reorganize. Judge John Dorsey of the U.S. Bankruptcy Court in Delaware must approve the plan and public statements, and creditors will vote on them before a confirmation hearing scheduled for later this year.
FTX released. reorganization plan They said they plan to do it in May. Provides 98% of creditors with at least 118% of their allowed claims. Under the plan, creditors allowed to claim less than $50,000 could receive 118% compensation upon court approval.
Some, including those representing some of FTX’s largest creditor groups, Oppose The plan said that when the exchange files for bankruptcy in November 2022, the estate will be required to pay in kind the cryptocurrency rather than its dollar value.
Andrew Dietderich, an attorney representing FTX in the bankruptcy proceedings, said the plan was “largely consensual.”
“What’s important today is that none of the key stakeholders we engaged raised any objection.” Dietderich said during Tuesday’s hearing.
Dietderich said he plans to request a vote and that one of the purposes of the vote is to get feedback from creditors.
Meanwhile, David Adler, a lawyer representing three creditors, told the court the disclosure statements were “woefully inadequate.” that Additionally, creditors raised concerns about receiving their funds back in cash rather than cryptocurrency.
“In the cryptocurrency cases I’ve been involved in, there’s usually a strong desire from the customer to get their cryptocurrency back in kind because if they don’t get it back in kind, it’s a disposition case or people believe that this is the case,” Adler said. He said it could be a disposition case under tax law.
The lawyer also said creditors would face a hefty tax bill if they received payment in cash rather than in kind.
“I’m not sure what the logistics are or why we can’t do that here, but it would save people with a potential tax bill a ton of money if they got it distributed in kind rather than cash,” Adler said. .
Judge Dorsey said this was a matter of confirmation and so the issue could be raised later. The next hearings are scheduled for July 17 and August 15.
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