FTX Creditors who were impacted by the implosion of 2022 are likely to start receiving part of their assets by the end of this year.
FTX Bankruptcy and the Joint Collaboration
According to a published note, the FTX bankruptcy estate has drafted a potential timeline to commence repayment of creditors by the end of 2024. This decision was made during the first meeting of FTX Digital’s Joint Official Liquidators in the Bahamas. It is worthy of note that the FTX bankruptcy that began in 2022 consists of two peculiar processes.
There is the Chapter 11 bankruptcy that is currently being tried in a Delaware Court in the United States. Then again, we have the official liquidation process of FTX Digital, FTX’s subsidy based in the Bahamas. This differentiation was necessary to accommodate the “hopelessly commingled” nature of FTX’s accounting.
Fortunately, both parties in the FTX bankruptcy phase are committed to working together, hence, any FTX creditor can easily submit their claim to either entity.
Remarkably, this would not impact negatively on the repayment that they are entitled to. The commitment of both the Chapter 11 Debtors and the Joint Official Liquidators is evident in their shared goal of making the first interim repayment distribution by the end of this year to creditors.
FTX Creditors Submit Claims for Repayment
To be eligible, creditor’s claims must have been admitted and must have satisfied Know-Your-Customer (KYC) documentation. As of last week, FTX indicated that claims by the U.S. government could total between $3 billion and $5 billion. The bankrupt crypto exchange is still engaging in negotiations with the authorities to ensure a well-streamlined process for asset distribution.
In the same vein, a former FTX Derivatives Exchange former head of product Ramnik Arora revealed that he has acquired up to $61 million in FTX claims through his new startup dubbed FTX Creditors. The FTX bankruptcy estate submitted claims possible as far back as March 1 and the scheduled deadline is May 15.
Therefore, FTX creditors have until May 15 to decide if they want to be part of the repayment process that has now been fixed for the end of 2024. However, there is a possibility that it will be extended to June next year.
Concurrently, Sam Bankman-Fried, the 32-year-old man behind all of the FTX debacle, received a 25-year jail term earlier this week.
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