FTX Reorganization Plan Approved: Here’s When Creditors Will Be Paid
Key Takeaways
- The Delaware bankruptcy court has approved FTX’s reorganization plan.
- 98% of creditors will receive at least 118% of their initial investment in cash, with interest.
- FTX creditors can expect repayments to begin in December 2024.
The Delaware federal bankruptcy court has finally approved FTX’s reorganization plan , paving the way for the bankrupt exchange to parcel out a staggering $16 billion in repayments to creditors left reeling in the wake of its spectacular collapse.
Judge Approves FTX Reorganization Plan
98% of FTX creditors are set to receive a windfall of at least 118% of their initial investment in cash, courtesy of the bankrupt crypto exchange’s court-approved reorganization plan.
On Monday, Oct. 7, Judge John Dorsey of the United States Bankruptcy Court for the District of Delaware greenlit the plan, opting for cash payouts with accrued interest over in-kind reimbursements.
This means that users who lost their funds when FTX imploded will receive the equivalent value of their digital assets in cold, hard cash rather than their original crypto assets.
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John J. Ray III, chief restructuring officer of FTX, called the approval of the reorganization plan a significant milestone.
“We are poised to return 100% of bankruptcy claim amounts plus interest for non-governmental creditors through what will be the largest and most complex bankruptcy estate asset distribution in history. The estate is working to finalize arrangements to make distributions to creditors across more than 200 jurisdictions worldwide.” Ray added .
The news comes as a long-awaited reprieve for thousands of creditors who lost their savings when FTX went bust in November 2022.
However, not everyone is celebrating the cash-only payouts, particularly given the significant surge in crypto prices over the past two years. Some had hoped to recoup their losses in the form of the very digital assets they originally invested in.
When Will FTX Creditors Get Paid?
With the reorganization plan now greenlit, FTX creditors can expect to receive their permitted claims within 60 days, putting the official start of repayment on pace for the second week of December.
However, industry observers caution that the repayment process may take longer to unfold.
Legal experts predict that FTX will continue the repayment process well into 2025, with some claims lasting into the first quarter of 2026.
One silver lining: FTX could settle a significant chunk of claims—nearly $1.1 billion in claims of under $50,000 by the end of the year.
For larger claims, FTX will begin payments to creditors with claims above $50,000 in 2025, fulfilling around 50% of these claims by the second quarter of that year.
The remaining claims will likely take another year to resolve, bringing a measure of closure to the thousands of creditors still reeling from FTX’s collapse.
Additionally, FTX’s reorganization plan shows that the exchange has set aside $230 million for shareholders, most of which are clients of Sullivan Cromwell , the firm responsible for overseeing the bankruptcy restructuring.
