FTX plans to return 100% of controlled assets to creditors.
DOJ controls assets forfeited through criminal cases.
Competing claims exist between FTX and preferred shareholders.
Settlement aims to resolve disputes and speed up distributions.
FTX’s Chapter 11 Plan for 100% Asset Return
In a significant development, FTX debtors have announced a proposed settlement involving preferred shareholders that could return 100% of assets under the company’s control to creditors. This plan, a key part of the Chapter 11 proceedings, aims to streamline the asset recovery process, ensuring that creditors are compensated fairly.
However, the U.S. Department of Justice (DOJ) holds control over the assets forfeited through criminal cases linked to FTX’s collapse. The DOJ has emphasized that, under criminal law, preferred shareholders should be considered victims, much like creditors. This creates a complex situation where FTX and its preferred shareholders both lay claim to the forfeited assets.
The DOJ’s Role and FTX’s Settlement Proposal
FTX and its preferred shareholders are at odds over how the forfeiture proceeds will be distributed. While these competing claims could lead to prolonged disputes, FTX is pushing for a settlement that would bring both sides to an agreement. This settlement, if approved by the DOJ, would help resolve the conflicting claims in a manner that FTX believes is equitable for both creditors and preferred shareholders.
FTX’s request for the DOJ to centralize the distribution process through the FTX Chapter 11 plan. By doing so, FTX aims to accelerate distributions to creditors while avoiding excessive costs tied to separate distribution mechanisms. If successful, this approach could spare creditors from substantial legal expenses and redundant processes.
For those seeking more detailed information on the DOJ’s forfeiture process and related assets, FTX’s disclosure statement, filed on June 27, 2024, offers additional insights into the legal complexities surrounding the case.
