FTX Announces Proposed Settlement and Amended Plan in Chapter 11 Cases
On October 17, 2023, FTX Debtors made a significant announcement regarding their ongoing Chapter 11 cases, marking a major milestone in their efforts to resolve complex customer property disputes. After extensive discussions involving key stakeholders, including the Ad Hoc Committee of Non-US Customers, the Unsecured Creditors Committee, and class action plaintiffs, FTX Debtors have reached a proposed settlement.
If approved by the Bankruptcy Court, this settlement will result in the creation of a special «Shortfall Claim» designed to benefit customers. This concept was initially proposed by FTX Debtors in July. The primary goal is to facilitate an offer to eligible customers, allowing them to settle their customer preference exposure at an agreed-upon amount. All creditor representatives involved in the negotiations have agreed to support a related amended Plan of Reorganization, which is expected to be filed by December 16, 2023.
In a related development, the Official Committee of Unsecured Creditors of FTX expressed its support for the proposed settlement and the amended Plan Term Sheet. The Plan Term Sheet represents a compromise between various parties, including the Committee, the Debtors, the ad hoc customer committee, and other representatives. It addresses a range of issues that aim to balance the rights of customer and non-customer creditors across the U.S. and foreign debtors.
The Committee believes that the amended Plan Term Sheet will expedite the Chapter 11 cases and the timeline for creditor and customer recoveries, although they acknowledge that significant work remains to be done. They remain committed to safeguarding the interests of customers and creditors throughout this process.
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