When FTX filed for bankruptcy protection in November 2022 and CEO Sam Bankman-Fried resigned, John Ray III, a seasoned bankruptcy litigator, stepped in to address the chaos. The exchange filed its Chapter 11 Plan of Reorganization and a disclosure statement on May 7, 2024, revealing that it owed approximately $11.2 billion to its customers. The company estimated it could distribute between $14.5 billion and $16.3 billion to pay its creditors and customers. The plan also included details on supplementary interest payments that could be made once all claims are paid in full.
Despite the official disclosures, rumors have been circulating online, spreading false information about the FTX distribution. FTX Creditor Activist highlighted this issue in a social media post, warning about the misinformation being spread.
Creditors To Get 10-25% Of Their Assets
According to a recent court filing, FTX’s debtors allocated 18% of proceeds from government forfeitures to a special fund for select shareholders, capped at $230 million. This decision has sparked considerable outrage among FTX creditors. Sunil Kavuri, an FTX Creditor Activist, pointed out that creditors might only recover between 10-25% of their assets due to the firm’s plan to base its payouts on the petition date valuation.
FTT Rallies Amidst Rumors Of Bankruptcy Distributions
Amidst the impending bankruptcy distributions, the native token of the bankrupt crypto exchange FTX, FTT, has experienced sharp bullish activity. FTT traded at around $1.4 over the past month, and on September 29, it surged by more than 70% to multi-month highs, briefly touching $2.70 for the first time since March 2024. It is currently trading at around $2.10.
This rally comes amidst social media rumors alleging that the FTX bankruptcy estate would start distributing reimbursement funds to creditors and customers on September 30. However, according to the official Chapter 11 filing, the bankruptcy plan has yet to be approved. A court hearing to approve the plan is scheduled for October 7, with Judge John T. Dorsey presiding over the next hearing on FTX’s restructuring plan. If approved, the FTX trustee will start paying distributions to creditors under $50,000 by the end of 2024. On the other hand, creditors with larger claims may receive distributions in the first or second quarter of 2025.
