The bankruptcy plan of FTX has garnered substantial support from creditors, paving the way for the distribution of $6.83 billion to crypto traders.
The restructuring administration of the collapsed crypto exchange FTX has received substantial support from creditors for its proposed reorganization plan. As indicated by a recent filing, over 94% of the voting creditors in the “dot com customer entitlement claims” class have voted in favor of the plan.
The reorganization plan was approved by nearly all classes of creditors, according to Kroll Restructuring Administration, the firm responsible for soliciting votes. Even though the two classes did not return their votes, they were assumed to have endorsed the plan.
According to the filing, the “US customer entitlement claims” class of creditors voted in favor of the plan, with 89.1% of them supporting it. This class will receive $60.99 million. Additionally, the plan was approved by 95.88% of the creditors in the “dotcom convenience claims” class, who collectively represented $223.59 million in claims.
According to the FTX bankruptcy plan, most creditors will receive a minimum of 118% of their claims in cash, equating to approximately $6.83 billion in cash value claims. Nevertheless, the amount owed to creditors was determined using the market value of the cryptocurrencies at the time the claims were filed rather than their current value.
Creditors’ support of FTX thus far is a critical step in identifying a solution to the crypto industry crash. Their support could expedite the plan’s approval, as the confirmation hearing is scheduled for October 7th.
John J. Ray III, the CEO and Chief Restructuring Officer of FTX, disclosed the substantial support they had received following the completion of the voting in August. He stated that the innovative structure of the plan is designed to fully reimburse non-governmental creditors, returning 100% of their claims plus interest while resolving complex disputes with both governmental and private entities. He expressed his confidence in completing the Chapter 11 bankruptcy process and the progress toward cash distribution for customers.
Potential Influence on the Recovery of the Crypto Market
According to certain crypto experts, the forthcoming compensation for FTX has the potential to enhance the overall crypto market during the bull run. Ash Crypto, a crypto on-chain analyst, identified the FTX compensation as a potential catalyst for a bullish run in the fourth quarter.
In the same vein, Lady of Crypto, a crypto commentator with over 500,000 followers, announced that $16 billion is to be distributed to crypto traders who missed buying opportunities during the market downturn, which was attributed to the actions of Sam Bankman-Fried. Consequently, she is of the opinion that the influx of cash could potentially ignite one of the most significant bull runs in the history of cryptocurrency.
With the confirmation hearing scheduled for six days, creditors and crypto experts will closely monitor the outcome. If the compensation process proceeds smoothly, numerous traders may utilize the funds collected to acquire additional cryptocurrency, potentially stimulating the market. Nevertheless, some individuals may have been psychologically impacted by the prolonged bankruptcy case and withdrew from cryptocurrency.