FTX creditors unimpressed with exchange’s bankruptcy exit plan

FTX’s official creditor committee said the current plan would add costs and delays to what’s already on track to be a historically expensive bankruptcy.

A body representing FTX customers said it is “extremely disappointed” by the exchange’s draft bankruptcy exit plan and claims it was ignored by FTX’s restructuring team.

In a July 31 court filing, FTX’s Official Committee of Unsecured Creditors (UCC) said despite its repeated requests and previous promises from the team, it “did not have a single call or meeting” with FTX to discuss its draft Chapter 11 plan.

The plan outlines and categorizes customer claims into classes and creates a path forward for FTX to re-launch as an offshore exchange. The UCC warned it would put forward its own plan for FTX customers to vote on if it continued to be ignored.

The UCC took issue with what it considered to be a late filing of the plan that created “the appearance of progress.” It explained the plan was one-sided and largely ignored suggestions the UCC raised during discussions.

“Put simply, the Debtors chose to publicly file their ideas for a plan.”

Another concern was the plan does not appoint someone with relevant crypto experience to run a potentially-rebooted FTX.

The plan should also create a regulatory-compliant recovery token and allocate value to customers most affected by FTX’s collapse in order to gain support from the “millions of customers and creditors whose votes are necessary to confirm a plan,” it said.

Additionally, the UCC claimed the current plan will cause more costs and delays. Ultimately, it asserted that it would have no choice but to put forward its own plan “for which customers and creditors will actually vote in favor.”

Related: Judge allows Terraform Labs to subpoena FTX

It was, however, appreciative that the restructuring team signaled a willingness to amend the plan to include the UCC’s recommendations, saying that negotiations will start “very soon.”

The Debtors filed a template for a plan of reorganization last night. Business level negotiations between the Committee and the Debtors over the terms of the plan have not happened yet, but will start very soon.

— Official Committee of Unsecured Creditors of FTX (@FTX_Committee) August 1, 2023

“This will take willingness on the part of the Debtors to listen and engage and not attempt to substitute their judgment for that of the parties who truly know and understand the cryptocurrency markets,” it added.

Magazine: Whatever happened to EOS? Community shoots for unlikely comeback