FTX bankruptcy surprise: Creditors to make $1.19 for every dollar
A US bankruptcy judge has approved a reorganization plan for FTX, the cryptocurrency company that declared bankruptcy nearly two years ago. The plan includes a payout of over $14 billion to the exchange's customers. John Ray, FTX's new CEO, said they are set to return 100% of bankruptcy claim amounts plus interest for non-governmental creditors in "the largest and most complex bankruptcy estate asset distribution in history."
FTX's reorganization plan approved by Delaware bankruptcy judge
The reorganization plan was approved by Delaware bankruptcy Judge John Dorsey. Under the approved plan, 98% of FTX's creditors will receive 119% of their allowed claim as of November 2022, when the exchange sought bankruptcy protection. This means, for every dollar they invested, creditors will get $1.19 back. The company has accumulated between $14.7 billion and $16.5 billion worth of assets for distribution, exceeding its estimated debt to creditors of about $11.2 billion.
FTX raised funds by selling off assets
FTX was able to raise the required funds for creditor repayment by liquidating a range of assets. These included venture investments owned by the exchange and other investments owned by Alameda Research, Bankman-Fried's crypto hedge fund. One of FTX's biggest divestments was its stake in Anthropic, an artificial intelligence start-up backed by Amazon. The company sold most of its stake in Anthropic this year for nearly $900 million.
FTX founder convicted of stealing billions from customers
Separately, FTX founder Sam Bankman-Fried was convicted on seven criminal charges last November. These included allegations of embezzling billions of dollars from FTX's customers. He was sentenced to 25 years in prison for his crimes. This legal fallout further complicated the company's ongoing bankruptcy proceedings and efforts to pay back its creditors.
