FTX.com, the bankrupt exchange, has unveiled its reorganization plan, which will classify claimants into different classes and pave the way for the exchange to resume operations as an offshore entity. The plan, outlined in dockets filed on July 31, aims to settle a complex collection of claims and involves the creation of 13 different classes. These include separate categories for Dotcom customer entitlement claims, U.S. customer claims, and nonfungible tokens (NFTs) customer claims.
The global settlement will require the valuation of claims in U.S. dollars, using a methodology that is yet to be approved by the Bankruptcy Court. FTX will also address disputes over assets held on FTX.com and FTX US exchanges. To facilitate the settlement process, FTX plans to establish three primary recovery pools. These pools will correspond to segregated assets belonging to FTX.com customers, FTX US customers, and assets that the company claims do not belong to either of the defunct exchange arms.
NFT holders will have their own separate classification. Unless the NFTs were “destroyed” or lost, they will be returned to the applicable customers. In such cases, their claims will be shifted to Class 4A or 4B, as outlined in the reorganization plan.
The plan also recognizes special “shortfall” claims by the two FTX exchange organizations against a general pool of assets. These claims aim to compensate the exchanges for the unauthorized borrowing and misappropriation of assets allegedly carried out by former CEO Sam Bankman-Fried and his associates.
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Additionally, the filing states the intention to cancel intercompany claims and “extinguish FTT claims.” This means that holders of FTT tokens will not receive any compensation for their holdings. The value of FTT played a crucial role in the collapse of FTX in 2023.
In the final section of the proposed plan, FTX outlines its intention to liquidate the estates and distribute cash to customers and creditors. However, there is a provision for customers to be offered voluntary elections in connection with the restart of an offshore FTX exchange. This would allow specific creditors to choose between receiving a share of equity, tokens, or other interests in the potentially rebooted exchange.
In parallel with the reorganization proceedings, FTX has filed a lawsuit against Sam Bankman-Fried and other implicated directors to recover over $1 billion in alleged misappropriated funds. The complaint, filed on July 20, names Bankman-Fried, former Alameda Research CEO Caroline Ellison, FTX co-founder Zixiao “Gary” Wang, and former FTX engineering director Nishad Singh as defendants.
Overall, FTX’s reorganization plan aims to address the vast array of claims and restructure the exchange. By classifying claimants and proposing recovery pools for different asset types, FTX aims to resolve the bankruptcy proceedings and pave the way for its re-emergence as an offshore entity. However, the final outcome and success of the reorganization plan will be determined by the Bankruptcy Court and the resolution of the lawsuit against the implicated directors.
