FTX, the potentially reviving crypto exchange, has proposed a plan to reorganize its creditors into different groups based on their priority. If the plan is approved, the company will relaunch the FTX exchange for international investors.
The new plan from FTX offers no allowance to FTT holders.
According to the filing, there are various groups of creditors in the FTX bankruptcy case. One specific group is “dotcom customers,” which are offshore investors of the exchange. Other groups include U.S. customers, NFT customers, general unsecured claims, secured claims, and subordinated claims.
The group of U.S. customers refers to customers in the United States. The “NFT customers” group is for customers that use the FTX NFT exchange.
The general unsecured claims include debts owed to Alameda’s lenders and trading partners. The subordinated claims consist of debts owed to creditors who have agreed to subordinate their claims, such as taxes and fines.
A Softball From FTX
Under the new plan, the repayments are set out according to “waterfall priorities,” starting with the highest priority creditors and working down to the lowest priority creditors.
Each class of creditors will receive a share of the remaining assets in the pool after the previous group has been paid. The creditors will need to agree on how the assets will be distributed.
Additionally, the document proposes the new exchange, FTX 2.0, could pay the creditors in non-cash consideration, such as equity securities, tokens, or other interests. In other words, the creditors would not receive a cash payout but instead would receive a stake in the new exchange company.
As stated in the proposal, the creditors could choose to forgo a cash payout altogether and instead receive stakes in the new exchange company. Another key point is that the new plan will offer no allowance to FTT holders.
“No Holder of an FTT Claim shall receive any Distributions on account of its FTT Claim. On and after the Effective Date, all FTT Claims shall be canceled, released, and extinguished and shall be of no further force and effect, whether surrendered for cancelation or otherwise,” as stated in the filing.
The former crypto exchange giant declared bankruptcy last year after a liquidity crisis. The event sent shockwaves through the crypto market in 2022. Like other crypto companies like Celsius, Voyager Digital, and BlockFi, FTX filed Chapter 11 under the US Bankruptcy Code to save the business and sell the platform to other companies.
Under the guidance of its new leadership, FTX unveiled plans for a relaunch earlier this year. The possibility of reviving the exchange was hinted at by FTX’s new CEO, John Ray, during a January interview. Despite the challenges, Ray believes in the exchange’s potential, and there are entities that share the same belief.
The Company May Take Care of Investors
In an important court hearing on April 12 at the United States Bankruptcy Court for Delaware County, FTX’s representatives, Sullivan & Cromwell, revealed that the exchange had managed to recover $7.3 billion. Moreover, they disclosed the possibility of FTX reopening in the second quarter of the following year.
John Ray III, with his expertise in restructuring companies during crises, had previously played a key role in helping energy company Enron Corp repay billions of dollars to its creditors.
For the creditors, this could be an advantageous deal if the new exchange company succeeds, as they would gain a stake in a potentially valuable enterprise. However, the confidence crisis stemming from the collapse last year may challenge the exchange’s revival.
As a result of this encouraging development, FTT tokens witnessed an impressive surge of 10.5%. Nevertheless, the future of FTX remains uncertain, as it hinges on the approval of creditors and other pivotal factors.
