A Chapter 11 Plan for the Suspension of Bankruptcy Claims from the Collapsing Crypto-Trade Exchange FTX

That may be a bit better for those who were trading on the exchange when it collapsed. When FTX sought bankruptcy protection in November 2022, bitcoin was going for $16,080. But crypto prices have soared as the economy recovered while the assets at FTX were sorted out over the past two years. The price of a single bitcoins was over $60,000 on Tuesday. If accrued interest is counted, the 290% loss is less than it would have been had those investors held onto those coins.

The FTX plan states that it will be possible for almost any creditor to get a full recovery plus interest, thanks to the liquidation of billions of dollars’ worth of investments by FTX Ventures.

“We are pleased to be in a position to propose a Chapter 11 plan that contemplates the return of 100 percent of bankruptcy claim amounts plus interest for nongovernmental creditors,” said John Ray III, the veteran bankruptcy professional in charge of the estate, in a statement. “I want to thank all the customers and creditors of FTX for their patience throughout this process.”

FTX ran out of funds to process customer withdrawals in November of 2022. Billions of dollars were missing from customer funds. A year later, FTX founder Sam Bankman-Fried was convicted of multiple counts of fraud and conspiracy in connection with the collapse of the exchange. He was sentenced in April to 25 years in prison.

The Internal Revenue Service will receive a $200 million upfront payment as part of the proposed plan for the suspension of high-value claims against FTX.

Customers and creditors that claim $50,000 or less will get about 118% of their claim, according to the plan, which was filed with the U.S. Bankruptcy Court for the District of Delaware. This covers 98% of FTX customers.

The plan provides for supplementary interest payments to the creditor if funds remain after the claims have been paid in full. The interest rate for most creditors is 9%.

John Ray III, CEO of the FTX Company, and the Case for a Revival of Assets It Accompanied by Bankman-Fried

FTX said that it was able to recover funds by monetizing a collection of assets that mostly consisted of proprietary investments held by the Alameda or FTX Ventures businesses, or litigation claims.

Bankman-Fried was convicted in November of fraud and conspiracy — a dramatic fall from a crest of success that included a Super Bowl advertisement, testimony before Congress and celebrity endorsements from stars like quarterback Tom Brady, basketball point guard Stephen Curry and comedian Larry David.

John Ray III, the company’s new CEO, is best known for his role in the clean up of the mess made after the collapse of Enron.

“We are pleased to be in a position to propose a chapter 11 plan that contemplates the return of 100% of bankruptcy claim amounts plus interest for non-governmental creditors,” Ray said in a prepared statement.

FTX is a company but its future is unclear. In early 2023, Ray said that he had formed a task force to explore reviving FTX.com, the crypto exchange.

The sordid details of a company run amuck that emerged after the assets were seized would prevent almost any business from attempting a comeback.