FTX has billions more than needed to pay bankruptcy victims

financialpost.com:

Cryptocurrency exchange FTX has amassed billions of dollars more than it needs to cover what customers lost in its November 2022 collapse, setting them up to receive full recoveries, plus interest, a rare outcome in U.S. bankruptcy proceedings.

Lower-ranking creditors typically receive just pennies on the dollar for their holdings, but FTX benefitted from a strong rally in cryptocurrencies including Solana, a token heavily backed by convicted fraudster and FTX founder Sam Bankman-Fried. The company has also sold dozens of other assets, including various venture-capital projects like a stake in the artificial-intelligence company Anthropic.

“In any bankruptcy, this is just an unbelievable result,” said FTX Chief Executive Officer, John Ray, who took over the firm when it collapsed.

Once it finishes selling all of its assets, FTX will have as much as US$16.3 billion in cash to distribute, according to a company statement. It owes customers and other non-governmental creditors about US$11 billion.

There have only been a handful of large corporate U.S. bankruptcies that saw creditors get all their money back in recent times. In 2021, car rental company Hertz exited bankruptcy with money left over to repay shareholders, following a strong run-up in used car prices. In 2013, American Airlines Group Inc.’s parent company also exited bankruptcy with a plan to gave a distribution to shareholders and repay unsecured creditors in full.

The latest figures underscore the surprising outcome for FTX, whose collapse drew comparisons to Enron Corp.’s fraud-fuelled downfall and the unravelling of Bernie Madoff’s Ponzi scheme. Earlier this year, the company had about US$6.4 billion in cash.

Although all debts will be paid in full, plus