- SEC Demands Removal of Liability Discharge Provision
- SEC May Challenge FTX's Crypto Distribution
- Impact on FTX Creditors
The US Securities and Exchange Commission (SEC) filed an application stating it could object to the FTX repayment plan if certain changes are not implemented.
SEC Demands Removal of Liability Discharge Provision
The SEC has requested that the discharge provision in the plan and proposed confirmation order be removed. This provision granted complete immunity from liability to the estate administrators and even third-party advisors. Notably, US Trustee Andrew Vara and a group of creditors led by Sunil Kavuri had previously made similar objections in their filings. The SEC mentioned that it had informed the FTX bankruptcy administrator to delete that provision.
SEC May Challenge FTX's Crypto Distribution
The regulator also reserved rights on the cryptocurrencies that the FTX bankruptcy estate has not liquidated or planned to distribute to creditors. The SEC noted that the estate wants to distribute stablecoins to certain creditors but reserves the right to challenge such distributions involving crypto assets.
Impact on FTX Creditors
With the SEC joining multiple oppositions to the discharge provision, the FTX liquidator would likely amend the provision. However, the potential objection by the SEC could further extend the waiting period for FTX creditors who have already waited almost two years to recover their funds.
The SEC's objections to the FTX debt repayment plan may lead to changes in the discharge provision and potential delays in the debt recovery process for creditors.
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