When FTX filed for bankruptcy protection in November 2022, and CEO Sam Bankman Fried resigned, John Ray III, a bankruptcy litigator, took over to fix the clutter. The exchange filed its Chapter 11 Plan of Reorganization and a disclosure statement on May 7, 2024, revealing that it owed about $11.2 billion to its customers.
The company estimated it could distribute between $14.5 billion and $16.3 billion to pay its creditors and customers. The plan also included details on supplementary interest payments that could be made once all claims are paid in full.
However, rumors were doing rounds online, spreading false information about the FTX distribution. FTX Creditor Activist noted this in an X post.
According to a court filing, FTX’s debtors allocated 18% of proceeds from government forfeitures to a special fund for select shareholders, capped at $230 million. This news sparked considerable outrage among FTX creditors. FTX Creditor Activist, Sunil Kavuri pointed out that creditors might only recover 10-25% of their assets due to the firm’s plan to base its payouts on the petition date valuation.
Amidst the impending bankruptcy distributions, the native token of the bankrupt crypto exchange FTX has seen a sharp bullish activity. FTT traded at around $1.4 over the past month and on September 29, it surged by more than 70% to multimonth highs and briefly touched $2.70 for the first time since March 2024. FTT is currently trading at around $2.10.
FTT’s rally comes amidst social media rumors alleging that the FTX bankruptcy estate would start distributing reimbursement funds to creditors and customers on September 30.
However, according to the official Chapter 11 filing, the bankruptcy plan has yet to be approved. A court hearing to approve the plan is scheduled for Oct. 7. Judge John T. Dorsey will preside over the next hearing on FTX’s restructuring plan. If approved, the FTX trustee will start paying distributions to creditors under $50,000 by the end of 2024. On the other hand, creditors with larger claims may receive distributions in the first or second quarter of 2025.
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