Rumors are circulating on social media that the FTX bankruptcy estate will begin distributing reimbursement funds to creditors and customers on September 30, 2024. However, the rumors are false, as the reimbursement plan has not yet been approved by a court of law.
Current Status of the Payout Plan
According to the updated Chapter 11 filing, the next court hearing to confirm the restructuring plan is October 7, 2024. Judge John T. Dorsey of the United States Bankruptcy Court for the District of Delaware will oversee the hearing. If the plan is approved, smaller claimants with claims under $50,000 may begin receiving distributions by the end of 2024. Litigants with larger claims may not see distributions until the first or second business quarters of 2025.
Opposition from Creditors
FTX creditors led by Sunil Kavuri have opposed the reorganization plan on several grounds, including demands to be reimbursed with in-kind assets and opposing the taxable event that a cash payment would create. Attorneys for FTX insist that any creditor reimbursements must be made in cash to avoid clashing with existing Chapter 11 bankruptcy laws and hindering the process. However, the question of cash or crypto has sparked intense opposition among creditors, who argue in-kind distributions are the only way to make creditors and former customers whole.
Market Impact of the Payouts
Founder of 10x Research Markus Thielen believes that the FTX payout may be a bullish catalyst for the markets. The analyst explained to Cointelegraph that the reimbursement may cause a $5 billion to $8 billion capital inflow into the market — creating demand and sending prices higher.
In conclusion, future payouts related to the FTX bankruptcy depend on court decisions and could significantly impact the market. Despite opposition, the final decision will be made in the October 2024 hearing.
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