Breaking down the FTX Bankruptcy Disclosure Statement and Plan

On May 7th 2024, the administrators of the FTX bankruptcy released a plan to address the creditors' claims and compensate them for their loss. Here's a breakdown of this plan, how it works and how much creditors are likely to recover.

If you are a FTX EU creditor, the plan states that you will only recover 100% of your claim value on the day of the bankruptcy announcement or petition date value.

Recovery rates

Here are a few important key elements of the plan to take into consideration:

Check Claim Value

All remaining assets of the Debtors will be held in a trust named Consolidated Wind Down Trust. Its purpose is to liquidate all remaining assets left after the bankruptcy fallout and distribute the cash earnings of the sale to creditors.

Liquidation process

Non-governmental creditors have full payment priority

The plan aims to pay all non-governmental customer and creditor claims in full based on their claim's Petition Date value.

The plan mentions interest payments to compensate creditors for lost time value with a 9% yearly interest rate.

Certain customers are being compensated first

The FTX group was divided into several entities. Customers of the FTX.com and FTX.US exchanges have priority claims, known as the Dotcom Intercompany Shortfall claim and the US Intercompany Shortfall claim. These customers will be compensated faster than others.

The FTX administrators will use government claims to help compensate for larger claims.

The plan proposes using funds from subordinated government claims to create a Supplemental Remission Fund to help compensate claims above 50k USD (non-convenience claims).

This fund will make additional payments to affected customers and creditors. Note there are limited funds to make these payments and they are highly uncertain.

Smaller claims will be compensated faster.

Smaller claims or convenience class claims (reconciled values of $50,000 or under) will experience quicker payouts.

This mechanism allows approximately 98% of customers to receive early and lower recoveries.

Time to payout

9% yearly interest payments have been decided

Creditors will receive interest at a consensus rate of 9%, resulting from negotiations with large interest groups. This rate reflects the Delaware prejudgment interest rate.

9% interest rates

How long will this all take?

Payments have been announced to begin in Q1 2025 but we estimate they will start more likely around Q2 2025.

Creditor Recovery Plan

Below are the different creditor groups and how much they should recover. The plan categorizes claims and interests into classes, each receiving specific treatments.

ClassEstimated Allowed Claims ($ million)Recovery (%)
Class 1Priority Tax Claims200100%
Class 2Other Priority Claims0100%
Class 3ASecured Loan Claims250109%
Class 3BOther Secured Claims100%
Class 5ADotcom Customer Entitlement Claims7995127% - 142%
Class 5BU.S. Customer Entitlement Claims168127% - 142%
Class 5CNFT Customer Entitlement Claims100%
Class 6AGeneral Unsecured Claims1133125%
Class 6BDigital Asset Loan Claims642127% - 142%
Classes 7A, 7B, 7CConvenience Claims118%
Class 10BSenior Subordinated Governmental Claims88992% - 17%

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