A new development has occurred in the ongoing FTX restructuring proceedings. The United States trustee has voiced strong concerns about the crypto exchange’s revised reorganization plan, despite FTX's claims of the plan's backing by many creditors.
Problems with the Restructuring Plan
This comes after the insolvent cryptocurrency exchange FTX said that its revised restructuring plan had received preliminary approval from all eligible creditors. The trustee Andrew Vara and other creditors have pointed out many issues with the plan in formal objections.
Imbalanced Creditor Payments
The restructuring plan’s planned legal exclusions are a major source of concern for the trustee. According to Vara, the plan offers the administrators and counselors of the estate excessive legal protection. He argues that these safeguards are far more extensive than what is normally provided to estate professionals by the applicable laws. The trustee also highlighted the unequal treatment of creditors depending on the amount of their claims. Vara notes that larger creditors may receive up to 143% repayment, while smaller creditors, with claims around $50,000, would get only 119%.
Trustee's Opinion
Given that the FTX estate is anticipated to have sufficient funds to pay all creditors equally, Vara believes that this imbalance is particularly unwarranted. He argues that the legal characteristics of these creditors’ claims are identical.
In conclusion, despite the preliminary approval of the FTX restructuring plan by many creditors, U.S. Trustee Andrew Vara and other creditors have raised significant issues and continue to express their concerns.
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