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According to the FTX bankruptcy estate, total claims from injured parties top $11 billion, as a court hearing to confirm the plan looms.
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Rumors are circulating on social media that the FTX bankruptcy estate will begin distributing reimbursement funds to creditors and customers on September 30, 2024. However, the rumors are false, as the reimbursement plan has not yet been approved by a court of law.
According to the updated Chapter 11 filing, the next court hearing to confirm the restructuring plan is October 7, 2024. Judge John T. Dorsey of the United States Bankruptcy Court for the District of Delaware will oversee the hearing.
If the plan is approved, smaller claimants with claims under $50,000 may begin receiving distributions by the end of 2024. Litigants with larger claims may not see distributions until the first or second business quarters of 2025.
FTX reorganization plan documents. Source: Kroll.
Related: FTX creditors only getting ‘10-25% of their crypto back’ — Creditor
The distribution plan faces opposition from creditors
FTX creditors led by Sunil Kavuri have opposed the reorganization plan on several grounds, including demands to be reimbursed with in-kind assets and opposing the taxable event that a cash payment would create.
Attorneys for FTX insist that any creditor reimbursements must be made in cash to avoid clashing with existing Chapter 11 bankruptcy laws and hindering the process. However, the question of cash or crypto has sparked intense opposition among creditors, who argue in-kind distributions are the only way to make creditors and former customers whole.
The current distribution plan stipulates that creditors will be reimbursed according to the date the legal petition was filed. At that time, the price of Bitcoin (BTC) was approximately $16,000. This means creditors and former customers would only receive roughly a quarter of their previous holdings under the current distribution plan, FTX creditor Sunil Kavuri told Cointelegraph.
Market impact of FTX distribution payments
Founder of 10x Research Markus Thielen believes that the FTX payout may be a bullish catalyst for the markets.
The analyst explained to Cointelegraph that the reimbursement may cause a $5 billion to $8 billion capital inflow into the market — creating demand and sending prices higher.
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This article first appeared at Cointelegraph.com News
