FTX creditors seek repayments at current market rates

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Bankrupt crypto exchange FTX unveiled yesterday a new plan to pay out at least 118% of recognized claims to 98% of its creditors. However, the plan faces pushback from Sunil Kavuri, who speaks for the largest group of creditors. Kavuri has called for a rejection of the proposed restructuring, arguing that repayments should reflect the current market prices of assets, not their value at the time of FTX’s bankruptcy.

https://twitter.com/sunil_trades/status/1788139467322150958

Kavuri said the pricing in the petition for repayment underestimated the actual value of FTX customer holdings. He claimed that the FTX debtors had caused creditors more than $10 billion in losses.

The restructuring unit of FTX recovered assets worth between $14.5 and $16.3 billion after a 17-month period, which is more than the exchange’s estimated shortfall of $8 to $10 billion at the time of its collapse. With these recovered funds, the firm asserts it can compensate 98% of FTX’s users.

Those with claims of $50,000 or less are slated to receive at least 118% of their asset value within two months of court approval, while the rest are to be paid the full value of their assets plus a 9% interest rate for the holding period.

Kavuri also pointed out an ongoing lawsuit against Sullivan & Cromwell (S&C), the law firm handling FTX’s bankruptcy, over their previous relationship with the exchange. He opposes the inclusion of an exculpation clause that protects S&C from lawsuits related to misconduct.

The law firm was previously sued by a group of FTX creditors represented by Edwin Garrison. The creditors alleged the firm knowingly provided services or assistance that directly enabled or facilitated FTX’s fraudulent activities.

S&C was also selected to oversee Binance following its settlement with the US Department of Justice.

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