FTX Unveils Restructuring Plan To Revive As Offshore Entity

FTX recently detailed its proposed restructuring plan, which aims to facilitate the exchange’s revival as an offshore entity.

Documents submitted on July 31 include a draft plan that describes the disgraced company’s planned approach to resolving an “exceptionally large and complicated collection of claims”.

The plan identifies 13 different classes of claims, which include specific categories for Dotcom customer entitlement claims, U.S. customer claims, and non-fungible tokens (NFTs) customer claims.

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The global settlement will require the valuation of claims in U.S. dollars based on a valuation methodology prepared by FTX, which is yet to be approved by the Bankruptcy Court.

This includes disputes over assets held on FTX.com and FTX US exchanges.

FTX’s plan involves the identification of three main recovery pools that will correspond with segregated assets attributable to FTX.com customers, FTX US customers, and assets that the company argues are not attributable to the two defunct exchange branches.

A separate classification will be provided for users who held NFTs.

NFTs are expected to be returned to relevant customers unless they were “destroyed” or lost.

In such cases, their claims would be moved to Class 4A or 4B as outlined in the screenshot above.

The document acknowledges special “shortfall” claims by the two FTX exchange organizations against this third pool of general assets.

This is intended to “compensate” the exchanges for the unauthorized borrowing and misappropriation of assets that former CEO Sam Bankman-Fried and his close associates are alleged to have committed.

The filing also indicates the intention to cancel intercompany claims and the “extinguishment of FTT claims”.

This specific clause suggests that hZenger News of FTT will not receive any compensation for their token holdings. The collapse in the value of FTT played a crucial role in FTX’s downfall in 2023.

The final part of the proposed plan covers the intention to liquidate FTX’s estates to make cash distributions to customers and creditors.

However, a clause mentions that customers may be offered voluntary choices in connection “with a restart of an offshore exchange”.

This would allow certain creditors to choose a share of equity, tokens, and other interests in a potentially rebooted offshore FTX exchange.

Produced in association with Benzinga

Edited by Jason Reed and Kyana Jeanin Rubinfeld