In a significant development for FTX, approximately 95% of its users have expressed overwhelming support for the exchange’s proposed reorganization plan.
The vote, which involved FTX customers and creditors, highlighted a collective push towards a possible revival of the beleaguered cryptocurrency platform. Hearings to finalize the approval are now set for October 7, 2024.
On Tuesday, the United States Bankruptcy Court for the District of Delaware heard that approximately 94.5% of FTX clients supported the reorganization plan in a vote held on August 16. This plan aimed to address claims totaling around $6.83 billion. This overwhelming support underscores users’ eagerness to recover their investments following the exchange’s collapse due to allegations of fraud and mismanagement under former CEO Sam Bankman-Fried.
Notably, the proposed plan indicates that, based on digital asset valuations at the time of bankruptcy filing, nearly 98% of creditors could expect to receive at least 118% of their claims in cash.
Preferred shareholders are also in line for a favorable outcome, with the expectation of receiving 100% of their assets back.
“FTX will be returning 100% of the assets under FTX’s control to creditors in the Ch. 11 plan,” FTX tweeted on Tuesday.
However, the firm acknowledged emphasized that claims from clients and preferred shareholders will need to be carefully balanced as they navigate the complexities of bankruptcy proceedings.
“FTX and the preferred shareholders have competing claims to the forfeiture proceeds. While the DOJ will decide how to reconcile these competing claims, the settlement, if acceptable to the DOJ, would resolve them in a way that FTX believes is fair to both sides and avoids a protracted dispute.” it added.
In august John J. Ray III, CEO and Chief Restructuring Officer of FTX had emphasized the importance of the strong voting participation, stating, “The robust voting participation and corresponding results highlight the strong support and consensus for FTX’s Plan of Reorganization.” He noted that the plan is structured to ensure a return of 100% of bankruptcy claim amounts plus interest for non-governmental creditors.
The company’s approach further involves a centralized distribution process designed to streamline payouts and minimize excessive costs. This strategy comes in the wake of growing calls for transparency and efficiency as creditors await resolution.
That said, amid the optimistic developments, users have been urged to stay alert for misinformation about the timeline and nature of asset distributions, as some reports have incorrectly claimed that distributions would begin this week. It’s crucial to remember that the final decision on the restructuring plan will be made during the court hearing on October 7.
That said, as FTX prepares for the upcoming hearings, the outcome of these proceedings could pave the way for a new chapter for the exchange’s future, potentially restoring confidence among investors in the crypto sector.
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