FTX Creditors File Objection To Bankruptcy Reorganization, Not In Debtors’ “Best Interests”
FTX creditors have filed a June 5 objection to the crypto exchange’s repayment plan on the grounds that the FTX bankruptcy estate’s proposal does not work in favor of their “best interests.”
FTX Creditors Unhappy With Estate’s Plan, File Objection
According to the objection, FTX creditors are concerned about a number of items included in the estate’s plan, including the possibility of a “taxable event” since each respective investor will be receiving money instead of digital assets.
“It is painfully apparent that the debtors’ proposed plan will inflict additional hardships on customers through forced taxation that could be avoided by making an “in kind” distribution,” the filing reads.
CAHC has filed a objection to the FTX Plan
1) Plan is unconfirmable as a matter of law
2) Includes releases not in interest of the estate
3) Ignores property rights issue
4) Does not satisfy the best interest test pic.twitter.com/rpXxz0tmP2— Sunil (FTX Creditor Champion) (@sunil_trades) June 6, 2024
In addition to tax concerns, creditors widely disagree with the valuation of assets ascribed to their claims under the FTX plan and moreover dispute whether or not customer assets should be distributed by the John J. Ray III-led estate.
“The clear and unambiguous terms of service, as well as public records, including statements by the debtors, the CFTC, the SEC, guilty pleas by former controllers of the debtors and testimony in Samuel Bankman-Fried’s criminal trial support the unequivocal conclusion that the Debtors seek to distribute stolen digital assets,” the objection states.
“(The) debtors position is diametrically opposed to the findings – beyond reasonable doubt – of SBF criminal case that SBF misappropriated customer funds,” Sunil Kuvari, an FTX creditor and activist alleged in a June 6 X post.
What Will Happen To Former FTX Customers’ Coins?
News of the objection comes amidst growing debate over the FTX ‘s handling of the bankruptcy estate, with many FTX creditors concerned over its burgeoning legal fees charged.
Ray, who famously spearheaded Enron’s bankruptcy and recovery, reportedly earned $1575 an hour for his management of FTX this spring, per The Block.
According to a May press release from the crypto exchange, FTX’s estate is expected to pay back 118% of allowed claims to 98% of its customers.
However, creditors like Kuvari argue that the estate’s valuation (which goes by the tokens’ value at the time the crypto exchange initially filed for bankruptcy in November 2022) is fundamentally flawed and circumvents a number of gains that should have been earned by their investments had the exchange not of collapsed as part of SBF’s massive crypto scheme.
“By breathlessly touting what they claim to be a full recovery with interest for customer creditors, debtors ignore that offering customers 129% recovery of the value of their cryptocurrency accounts as of the petition date is decidedly not the same as a full economic
Recovery,” FTX creditors’ objection continues.
Meanwhile, the crypto exchange has filed its own complaint against a handful of its creditors, alleging that their efforts are holding back the bankruptcy estate’s completion.
