FTX announced that after extensive discussions with the Ad Hoc Committee of Non-US Customers, the Unsecured Creditors Committee, and class action plaintiffs, the FTX Debtors have reached a proposed settlement of the customer property disputes, which is called the Customer Shortfall Settlement. The settlement will be proposed as part of an amended Plan of Reorganization, to be filed by the FTX Debtors by December 16, 2023. If approved by the Bankruptcy Court, customers are expected to receive over 90% of distributable value worldwide.
Pursuant to the Amended Plan:
- The FTX Debtors would divide substantially all of their assets into three pools based on circumstances at the start of the Chapter 11 cases: assets segregated for the benefit of FTX.com customers; assets segregated for the benefit of FTX US customers; and a "General Pool" of other assets;
- In addition to a claim against assets at their respective exchange, customers of FTX.com and FTX US would benefit from a "Shortfall Claim" against the General Pool corresponding to the estimated value of assets missing at their exchange;
- The Shortfall Claim is estimated to be approximately $8.9 billion for FTX.com and $166 million for FTX US;
- As a way to balance the customer groups' assertion of a property right arising from the misappropriation of exchange property and the difficulties of asset tracing in FTX's circumstances, a negotiated portion of the Shortfall Claim would be deemed to benefit from an equitable priority against the General Pool, such that 66% of the General Pool would be applied exclusively to pay Shortfall Claims (and 34% of the General Pool would be applied to pay remaining Shortfall Claims and other claims ratably).
To learn more about FTX's reorganization, please read:FTX 2.0
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