FTX Creditors Object to Bankruptcy Reorganization Plan, Claiming It is Not in Their Best Interests
FTX creditors have recently lodged an objection on June 5 against the proposed repayment plan put forward by the crypto exchange’s bankruptcy estate. They argue that the plan does not prioritize their “best interests.”
The objection highlights several concerns raised by FTX creditors regarding the estate’s plan. One major issue is the potential tax implications of receiving money instead of digital assets, which could result in a “taxable event” for investors.
The filing expresses the creditors’ dissatisfaction with the valuation of assets assigned to their claims under the FTX plan and questions the decision to have customer assets distributed by the estate led by John J. Ray III.
Citing various sources, including public records and legal proceedings, the objection accuses the debtors of attempting to distribute stolen digital assets. This claim is supported by statements made by the debtors, regulatory bodies, and previous legal cases involving individuals associated with FTX.
In response to the objection, Sunil Kuvari, an FTX creditor and activist, raised concerns about the misappropriation of customer funds in a post on June 6.
Debate over the handling of the bankruptcy estate has intensified, with many FTX creditors expressing unease over the increasing legal fees being charged. John J. Ray III, known for his involvement in Enron’s bankruptcy case, reportedly charges a staggering hourly rate for managing FTX’s affairs.
While FTX’s estate has announced plans to repay 118% of allowed claims to 98% of its customers, some creditors argue that the valuation of assets is flawed. They believe that the estate’s valuation does not account for potential gains that would have been realized if the exchange had not collapsed.
The creditors’ objection emphasizes that offering customers a 129% recovery of the value of their cryptocurrency accounts at the time of the bankruptcy filing is not equivalent to a full economic recovery.
Amidst these challenges, FTX has filed a complaint against some of its creditors, alleging that their actions are hindering the completion of the bankruptcy process.
