Key Points
- FTX will use the cash it has collected since its shutdown to repay its main creditors.
- Minor creditors have already started getting payments.
Recent reports from Bloomberg revealed that FTX will start paying its main creditors at the end of May. The crypto company will use the cash funds of approximately $11.4 billion collected since its shutdown.
1st Payment to Main Creditors Group Will Be on May 30
FTX will debut its repayments to the main group of debt holders on May 30, Bloomberg noted, quoting bankruptcy attorney Andrew Dietderich, who recently took over management of the Chapter 11 case.
The main creditors of the company include:
- Investors who are owed millions of dollars
- Institutions that had crypto on FTX
Main creditor repayments will take time as the company is faced with a very large number of claims, Dietderich told the US Bankruptcy Judge Karen Owens, in Wilmington, Delaware.
Billions of Flawed Claims
It seems that some of these claims are questionable, as they may conflict with KYC rules that require FTX to verify the identity of all creditors. Other claims may involve payment demands that are not legitimate, according to the lawyer.
Official reports note that FTX faces billions of flawed claims, while total creditor claims are around “27 quintillion”.
One quintillion is one billion times bigger than one billion, Bloomberg noted, highlighting that in bankruptcy cases, large numbers of duplicate, inflated, and false claims are commonly eliminated by lawyers following payout plans approved by a judge.
Legit Creditors to be Paid as Quickly as Possible
FTX will need to pay legit creditors as quickly as possible, as the interest rate FTX is earning on the $11.4 billion cash is smaller than the 9% rate creditors earn while waiting for their repayments.
It’s also worth noting that Bitcoin ‘s price has surged significantly since 2022. In November of that year, BTC was trading at around $20,000, while now, the coin is priced above $81,000. This insults a lot of creditors who expected to be paid in digital assets instead of dollars, Bloomberg noted.
The publication also noted that minor creditors have already started getting payments.
FTX filed for bankruptcy in November 2022 after the company was shut down and handed over to insolvency experts. The crypto company received court permission for the payout plan in October 2024.
