FTX Bankruptcy Plan Approved: Creditors to Receive 118%
A U.S. judge has approved FTX's reorganization plan, allowing creditors to recover 118% of their claims in cash, marking a significant step in the exchange's recovery.
Highlights:
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Judge approves plan, ensuring 98% of creditors are repaid.
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$16 billion in cash to be distributed within 60 days.
A U.S. judge has officially approved FTX's bankruptcy reorganization plan, marking a significant milestone nearly two years after the cryptocurrency exchange's collapse. Judge John Dorsey of the U.S. Bankruptcy Court for the District of Delaware sanctioned the plan during a hearing on Monday, allowing for the distribution of approximately $16 billion to creditors.
Under the approved plan, 98% of FTX's creditors are set to receive at least 118% of their claims in cash, a move that has been hailed as a "model case" for handling complex Chapter 11 bankruptcies. This decision comes after a majority of creditors—94%—voted in favor of the reorganization, which aims to facilitate the recovery of funds lost during FTX's dramatic downfall due to fraud allegations.
Despite the positive outlook for creditors, concerns have arisen regarding the decision to repay in cash rather than cryptocurrency. Some representatives argue that this could lead to significant tax burdens for creditors.
Nevertheless, Judge Dorsey emphasized that FTX lacks sufficient cryptocurrency reserves to facilitate such payouts, stating that its native token, FTT, holds no value.
With repayments expected to begin within 60 days, this development not only provides hope for affected customers but may also influence the broader cryptocurrency market as funds are reinvested.
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