FTX Bankruptcy Claims Hit $11 Billion as Crucial Court Date Nears

The latest development in the FTX bankruptcy case reveals that total claims from affected parties have surged past $11 billion. This staggering figure emerged during the ongoing Chapter 11 proceedings, with a critical court hearing scheduled for October 7, 2024, to confirm the restructuring plan.

The proposed distribution plan has not been without controversy, as a group of creditors, led by Sunil Kavuri, has raised significant opposition. Specifically, one of their primary concerns is the method of reimbursement. The creditors argue for payments in-kind, rather than cash, to avoid taxable events that cash payments could trigger. FTX’s legal team insists on making reimbursements in cash to comply with Chapter 11 bankruptcy laws. However, creditors continue to resist, arguing that in-kind distributions are necessary to fully compensate affected parties.

The current plan calculates reimbursements based on Bitcoin’s value at the time the legal petition was filed, roughly $16,000. This valuation means creditors and former customers would recover about a quarter of their holdings before the bankruptcy, according to FTX creditor Sunil Kavuri in discussions with Cointelegraph.