The FTX Debtors estate, led by CEO John Ray III and Sullivan & Cromwell lawyers, filed an amended Chapter 11 plan of reorganization today, outlining how bankruptcy claims will be handled in the case.
Notably, the plan includes a provision that would value claimants’ digital assets in cash at the time of the bankruptcy filing on November 11, 2022.
The demise of FTX caused a significant drop in the market, which has since recovered well, with the global crypto market cap increasing from around $856 billion to 1.6 trillion today. In that time, FTX’s own token has nearly doubled. That means creditors could lose out on millions of dollars in potential gains if the plan is approved.
Sunil Kavuri, an outspoken FTX creditor, claims the reorganization plan violates FTX’s Terms of Service, which state that digital asset titles belong to customers, not the exchange. “The reason SBF was convicted beyond reasonable doubt on all 7 counts was that he stole digital assets that were owned by FTX customers,” Kavuri said in a statement.
According to the plan, certain classes of creditors will be able to vote on the amended reorganization plan. The Debtors emphasize their efforts to get to this point in a statement, writing, “the Plan and this Disclosure Statement reflect many compromises to create the best, most equitable, and economical outcome for all creditors and stakeholders in these Chapter 11 Cases.”
For the plan to go into effect, various approval thresholds in terms of both dollar amount and claimant number will be required. However, under certain conditions known as a “cram-down,” classes of creditors who did not agree to the plan can still be forced to accept it if the solution is “fair and equitable,” according to the Debtors’ statement, FTX was not successful.
FTX did not respond immediately to The Coinbrit’s request for comment.