Originally published on: September 29, 2024
Are you eagerly awaiting news on when FTX will begin distributing reimbursement funds to creditors and customers? There have been rumors circulating on social media that the process will kick off on Sept. 30. However, sources indicate that this information is inaccurate. The reimbursement plan has yet to be approved by a court of law.
The next crucial court hearing to confirm the restructuring plan is scheduled for Oct. 7. Judge John T. Dorsey, from the United States Bankruptcy Court for the District of Delaware, will preside over this hearing.
Claimants with less than $50,000 in claims may start receiving payments by the end of 2024 if the plan is given the green light. On the other hand, those with larger claims might have to wait until the first or second quarter of 2025 before any distributions are made.
The reorganization plan documents for FTX can be sourced from Kroll.
In recent developments, FTX creditors, including Sunil Kavuri, have voiced opposition to certain aspects of the reorganization plan. Their concerns range from being compensated with non-cash assets instead of cash to arguing against the tax implications of a cash payout.
FTX’s legal representatives have emphasized the necessity of cash reimbursements to stay in compliance with existing Chapter 11 bankruptcy laws. The question of whether creditors will receive cash or crypto distributions has become a prominent point of contention among those affected.
Under the current distribution plan, creditors are set to be reimbursed based on the Bitcoin price at the time the legal petition was filed, around $16,000. This means that creditors and former customers are looking at receiving approximately a quarter of their previous holdings.
Markus Thielen, the founder of 10x Research, views the FTX payout as a potential bullish catalyst for the markets. In an interview, Thielen suggested that the reimbursement could lead to a significant capital inflow of $5 billion to $8 billion, creating demand and driving prices up.
With all eyes on the FTX bankruptcy proceedings, stay tuned for updates on this unfolding story.