FTX filed a revised plan that pledges to return 90 % of the money it has located to former customers. The pool of located money totals roughly $7 billion in cash, liquid crypto along with other assets. The shortfall that customers suffered at the time of the bankruptcy petition stood at $8.7 billion. A simple comparison shows that even a full payout of the recovered pool leaves a gap of $1.7 billion.
The plan divides customers into two groups. Group A contains every account that held less than $250,000 on 2 November 2022. Group B contains every account that held more than $250,000 or that withdrew more than $250,000 between 2 November and 11 November 2022. Group A receives a cash payment equal to 100 % of the petition date dollar value of its claim. Group B receives the same dollar value minus a 15 % surcharge on any withdrawal above the threshold. The surcharge functions as a settlement fee that blocks later clawback litigation.
The petition date value fixes the exchange rate for every token at the price observed on 11 November 2022. Bitcoin traded at $17,000 that day. Ether traded at $1,200. Solana traded at $13. A customer who held one bitcoin on FTX on that date will receive $17,000 in cash, not the current market price of roughly $30,000. The customer therefore forfeits the appreciation of the underlying asset.
Travis Kling, founder of Ikigai Asset Management and an unsecured creditor, estimates that the blended recovery for all customers will reach 85 % of the petition date dollar value of their claims. The estimate assumes that the surcharge generates additional cash and that the estate liquidates the remaining alt coin portfolio at current market prices.
John J. Ray III, the court appointed chief executive of the FTX debtors, stated in a declaration that the estate has recovered more value than most observers predicted at the start of the case. He attributed the result to the sale of venture investments, the clawback of insider transfers, and the appreciation of the crypto portfolio after the petition date.
The debtors must file the amended disclosure statement with the United States Bankruptcy Court for the District of Delaware by 16 December 2023. The Committee of Unsecured Creditors and the Ad Hoc Committee of customers have until that date to negotiate further changes. A confirmation hearing is scheduled for the second quarter of 2024. If the court approves the plan, distributions will begin shortly after the effective date.