Deadline Extension Approved For FTX Creditors To Submit Debt Claims

The FTX bankruptcy saga continues with a glimmer of hope for creditors. Sunil, an FTX creditor, shared on X that the joint official liquidators of FTX Digital Markets have extended the deadline for submitting proof of debt. Originally set for May 15th, the new deadline is late July or early August.

This extension gives creditors 10-12 weeks to finalize their claims within the Bahamas’ legal framework. Creditors can participate in either the Bahamas or US proceedings, but not both concurrently. A detailed disclosure document, expected in June, will explain the consequences of each option. After its release, creditors will have 6-8 weeks to evaluate the information and make a well-informed choice.

The decision to extend the deadline and issue a comprehensive disclosure document underscores a commitment to transparency and choice for FTX customers. Despite differences in the claims processes between the Bahamas and the US, distributions are expected to proceed simultaneously. This measure aims to reduce anxiety and empower customers to make informed decisions about their financial recovery.

FTX Plans Creditor Repayment Scheme

The company has recently proposed a reorganization plan that promises significant returns for creditors. According to the filing, FTX intends to refund 118% of the outstanding claims to 98% of creditors through cash payments, pending court approval within 60 days. The reorganization plan also guarantees full repayment for non-governmental claims and offers a 9% compensation for their time value.

However, questions have arisen regarding this payment, particularly concerning the cryptocurrency market’s revival following FTX’s collapse. Many investors have voiced frustration over missing out on potential gains while their funds remain tied up in bankruptcy proceedings. Nevertheless, the FTX estate maintains that the market recovery is not the primary reason for the proposed lump sum.

The coming months are crucial for FTX. The success of the reorganization plan hinges on court approval. The extension and proposed payout allow creditors to recover their losses and potentially recoup their initial investments. However, caution is warranted as the outcome of the restructuring process and the court’s decision remain uncertain.

The author’s views are for reference only and shall not constitute any investment advice. Please ensure you fully understand and assess the products and associated risks before purchasing.