Collapsed cryptocurrency exchange FTX is moving closer to resolution as a majority of its creditors have voted to approve the company's reorganization plan.
Potential Recovery of Creditor Funds
According to a filing by Kroll Restructuring Administration, over 94% of FTX Dotcom clients supported the plan, marking a critical step forward in the lengthy bankruptcy process. The voting, which ended in August, revealed that nearly all classes of FTX creditors overwhelmingly voted to accept the plan. Two classes of creditors did not return their ballots, but these were presumed to approve the reorganization. This support paves the way for FTX to proceed with its proposed payout framework, though the full distribution of funds remains uncertain.
October Hearing Scheduled
The next major milestone for the reorganization plan will be the confirmation hearing, scheduled for October 7. This will determine whether the court finalizes the plan, setting the path for payouts to begin. In a previous ruling, a New York judge authorized FTX and its sister company, Alameda Research, to repay up to $12.7 billion to creditors.
Reality of Fund Recovery
Despite the promised payouts, the reality of what creditors can expect remains bleak. Many creditors are bracing for substantial losses, with recent bankruptcy documents indicating they may only recover 10-25% of their cryptocurrency holdings. Activist Sunil Kavuri, who has been closely following the case, noted that despite these approvals, FTX creditors face the 'grim reality' of recovering only a fraction of their original assets.
In summary, FTX creditors have taken an important step forward in the reorganization process, but the final payouts remain uncertain, especially given the volatility of cryptocurrency markets.
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