FTX Files Consensus-Based Plan of Reorganization

98% of FTX Creditors to Receive At Least 118% of Allowed Claims in Cash within 60 Days of Effectiveness

Other Creditors to Receive 100% of Allowed Claims plus Billions in Compensation for the Time Value of Their Investments

Plan Would Resolve Disputes with Governmental and Private Stakeholders without Costly and Protracted Litigation

WILMINGTON, Del., May 7, 2024 /PRNewswire/ -- 17 months after filing for chapter 11 in the District of Delaware, FTX Trading Ltd. (d.b.a. FTX.com) and its affiliated debtors ("FTX" or the "Debtors") today filed their anticipated amended Plan of Reorganization (the "Plan") and accompanying Disclosure Statement (the "Disclosure Statement") with the United States Bankruptcy Court for the District Court of Delaware (the "Bankruptcy Court"). Subject to being finalized and approved by the Bankruptcy Court, the Plan contemplates the centralized distribution to customers and other creditors around the world of virtually all of the assets associated with FTX at the time of its collapse in November 2022, regardless of where the assets were located at that time.

FTX forecasts that the total value of property collected, converted to cash and available for distribution will be between $14.5 and $16.3 billion. This amount includes assets under the control of the chapter 11 debtors as well as assets under the control of the Joint Official Liquidators of FTX Digital Markets, Ltd. (Bahamas), the Securities Commission of The Bahamas, the Joint Official Liquidators of FTX Australia, the United States Department of Justice and dozens of private parties that have cooperated in the recovery efforts.

FTX has achieved this recovery level by monetizing an extraordinarily diverse collection of assets, most of which were proprietary investments held by the Alameda or FTX Ventures businesses, or litigation claims. As previously disclosed, FTX.com had a massive shortfall at the time of the chapter 11 filing in November 2022 ? holding only 0.1% of the Bitcoin and only 1.2% of the Ethereum customers believed it held. Accordingly, the Debtors have not been able to benefit from the appreciation of these missing tokens during the chapter 11 cases. Instead, the Debtors have had to look to other sources of recoverable value to repay creditors.

The Plan contemplates payment in full of all non-governmental creditors based on the value of their claims as determined by the Bankruptcy Court. In addition, the Plan contemplates a subordination arrangement with governmental creditors that allows payment of interest to the primary classes of customers and creditors at up to a 9% rate (the "Consensus Rate") from the commencement of the chapter 11 cases through the date of distribution. There also may be the opportunity for certain creditors to receive additional payments through the Supplemental Remission Fund described in Section 1.F of the Disclosure Statement.

For creditors holding claims in an allowed amount of $50,000 or less, the Plan creates a special "convenience class". Because of this classification, if the Plan is approved by the Bankruptcy Court, the Debtors anticipate that 98% of the creditors of FTX by number will receive approximately 118% of the amount of their allowed claims within 60 days after the effective date of the Plan, subject to know-your-client and distribution information requirements.

At the heart of the Plan are a series of settlements reached consensually with the key economic stakeholders. The key settlements (including those that are still subject to finalization and Court approval) include:

• Resolution of the $24 billion in claims filed by the Internal Revenue Service for periods prior to the chapter 11 cases in return for a $200 million cash payment and a $685 million subordinated claim that will rank below claims of all creditors and governmental entities.
  
  
• A proposed agreement with the Internal Revenue Service to also subordinate tax claims arising after the commencement of the chapter 11 cases to payment of creditors in full with interest at the Consensus Rate.
  
  
• A proposed agreement with the Commodity Futures Trading Commission and potentially other governmental claimants to both subordinate their claims to the payment of non-governmental creditors in full with interest at the Consensus Rate, and to contribute any recoveries on these subordinated claims to a special fund created by the Debtors for purposes of making supplemental restitution to certain customers and creditors. The Debtors have proposed that the Supplemental Remission Fund be made available to all customers and digital asset lenders. Details of this arrangement remain to be finalized.
  
  
• A proposed arrangement with the Department of Justice pursuant to which over $1.2 billion of forfeiture proceeds can, if the Department of Justice decides, be distributed to customers and creditors through the chapter 11 cases with no incremental administrative expense or delay.
  
  
• The previously disclosed customer property settlement with the Ad Hoc Committee of Non-U.S. Customers, the Class Action Claimants and the Official Committee of Unsecured Creditors, which provides for the arm's-length settlement of customer property assertions in return for a special priority for customers in the Plan.
  
  
• The previously approved settlement with the Joint Official Liquidators of FTX Digital Markets, Ltd. ("FTX DM"), which allows for FTX.com customers to elect to have their claims reconciled in either the chapter 11 cases or the liquidation of FTX DM with materially equivalent financial results.
  
  
• The previously approved settlement with BlockFi, the largest creditor of FTX.

John J. Ray III, Chief Executive Officer and Chief Restructuring Officer of FTX, said: "We are pleased to be in a position to propose a chapter 11 plan that contemplates the return of 100% of bankruptcy claim amounts plus interest for non-governmental creditors. On behalf of FTX's independent Board of Directors, I want to extend our deepest appreciation to the numerous governmental agencies, including the United States Department of Justice, the Commodity Futures Trading Commission, the Internal Revenue Service and the Securities Commission of The Bahamas, for their tireless efforts, cooperation and assistance through this complex recovery process. I also want to thank the Joint Official Liquidators of FTX Digital Markets, the Ad Hoc Committee of Non-U.S. Customers, the Class Action Claimants, BlockFi, the Official Committee of Unsecured Creditors and all of their professionals for their hard work in the development of the Plan and its resulting achievements. Finally, I want to thank all the customers and creditors of FTX for their patience throughout this process."

Advisors

The FTX Debtors are represented by Sullivan & Cromwell LLP, Quinn Emanuel Urquhart & Sullivan LLP and Landis Rath & Cobb LLP as legal counsel and are assisted by Alvarez & Marsal North America, LLC as financial advisor and Perella Weinberg Partners LP as investment banker, among other advisors.

Additional Information

The Plan is subject to material conditions and risks, and all stakeholders are asked to review the Disclosure Statement carefully upon its approval by the Bankruptcy Court. Bankruptcy Court filings, including the Plan and the Disclosure Statement, and other documents related to the court proceedings are available at https://cases.ra.kroll.com/FTX/. 

SOURCE FTX