The collapsed crypto enterprise FTX, founded by Sam Bankman-Fried, has presented a proposal to conclude its bankruptcy proceedings with a Delaware court.
The estate’s filing, dated Saturday, outlines a plan that entails calculating asset values for creditor claims based on prices from the day FTX filed for bankruptcy in November 2022.
FTX Bankruptcy Timeline and Context
FTX faced a tumultuous period in November 2022, experiencing a collapse, highlighting the fragile balance sheet of its trading unit, Alameda. Moreover, the anticipated bankruptcy plan, due by December 16, followed earlier informal proposals aiming to reimburse up to 90% of recovered funds to creditors.
The estate in the new proposal categorizes creditor and customer claims according to the priority intended for their reception. Calculation of claim values will rely on asset prices from the date FTX initiated its bankruptcy proceedings. Additionally, the estate’s statement emphasizes the plan’s objective to “maximize and efficiently distribute value to all creditors.”
Challenges and Expected Opposition
Until court approval is granted, diverse creditor groups are anticipated to oppose the proposed plan, echoing the pattern observed in other significant crypto-related bankruptcy cases. Furthermore, the scheduled approval hearing in 2024 indicates an extended timeline for resolving FTX’s bankruptcy.
The submission of the bankruptcy proposal by FTX’s estate marks a significant step in resolving the aftermath of the company’s collapse. The strategy outlined in the proposal, involving asset evaluation at the time of bankruptcy filing, along with prioritization of creditor claims, aims to facilitate an efficient and equitable distribution of recovered assets.
However, the expected opposition and the extended court proceedings indicate the complexity and challenges associated with concluding high-profile crypto-related bankruptcy cases like FTX’s.