FTX, a company that collapsed in November 2022, has been granted approval by a US bankruptcy court to solicit votes on a liquidation plan that pays customer claims in cash. The plan, which determines payments based on crypto prices at the time of FTX’s collapse, has stirred controversy among customers who seek higher amounts due to the increase in crypto prices since then.
Despite objections from some creditors who argue that FTX is misleading customers by promising a full recovery with interest, the court has allowed the company to proceed with its cash payment plan. Customers who held one Bitcoin with FTX in 2022 are expected to receive $16,800 under the proposed plan, compared to the current value of each BTC.
FTX CEO John J. Ray III stated that it is impossible to return the crypto that customers had deposited, as the company had a shortfall upon filing for bankruptcy. Ray emphasized that FTX held only a small percentage of Bitcoin and Ethereum shown in customer balances, making it challenging to repay customers in full.
Concerns Raised by Creditors
Creditors have raised concerns about the difference in payment amounts and the impact on fellow customers. FTX will accept votes on the liquidation plan until Aug. 16 and seek final approval on Oct. 7. Despite the challenges faced by the company, Ray remains committed to ensuring that customers receive their dues in a timely manner.
Future Prospects for FTX
Reports indicate that FTX has assets totaling $11.4 billion, with the potential to increase to $12.6 billion by the end of October. The company aims to wind down its operations efficiently and settle customer claims within 60 days of the court’s approval. A faster payment option will be available for claims under $50,000, providing relief to a majority of customers.
The approval granted to FTX marks a significant step in the company’s liquidation process. Despite challenges and objections from creditors, FTX is moving forward with a cash payment plan to settle customer claims. The CEO’s acknowledgment of the limitations faced by the company reflects a commitment to transparency and fairness in handling the bankruptcy proceedings. As FTX navigates through this difficult period, it remains focused on fulfilling its obligations to customers and creditors alike.
