FTX is preparing to unveil an updated plan for its reorganization by mid-December. This plan, aimed at compensating unsecured creditors, comes amid a surge in activity surrounding the crypto exchange's bankruptcy proceedings.
In a letter addressed to the FTX 2.0 Customer Ad Hoc Committee, the Official Committee of Unsecured Creditors has emphasized the need to maintain a balance in asset valuation and distribution within the amended reorganization plan. This plan aims to reconcile the different perspectives of the stakeholders.
FTX's Bankruptcy Proceedings and Potential Acquisitions
Several activities, including a potential acquisition by financial services firm Perella Weinberg, loom over the bankruptcy proceedings. These activities will be formally presented for approval by the court. Concepts such as issuing recovery rights tokens, mentioned in the FTX 2.0 Customer Ad Hoc Committee's communication, are under scrutiny.
FTX and its affiliated companies, comprising 101 out of 130 entities, have initiated a review of their global assets. The primary goal is to obtain maximum value for stakeholders. However, FTX has clarified that the engagement with Perella Weinberg is contingent upon approval by the court.
Gary Gensler, the Chair of the SEC, recently hinted at potential approval for a revamped FTX crypto exchange, provided adherence to the law. Meanwhile, the Official Committee of Unsecured Creditors has expressed eagerness to collaborate with the FTX 2.0 Customer Ad Hoc Committee in the coming months.
Last month, a bankruptcy court in Delaware granted FTX permission to liquidate approximately $873 million worth of assets, predominantly held in trusts managed by Grayscale Investments and Bitwise. This decision marked a significant milestone in FTX's efforts to repay creditors impacted by the collapse of the crypto exchange.
Navigating FTX's Asset Recovery Efforts
Initiated by a motion filed on November 3, the court's approval covers the sale of six cryptocurrency trusts, including the Grayscale Bitcoin Trust (GBTC), Grayscale Ethereum Trust (ETHE), and Bitwise 10 Crypto Index Fund. FTX's holdings in Grayscale, totaling 22 million units of GBTC and 6.3 million shares of ETHE, represent a substantial portion of the sanctioned assets.
FTX has been working to recover assets under the leadership of John J. Ray III since the crypto exchange collapsed in November 2022. The recovery, amounting to nearly $7 billion, is crucial to the exchange's creditors, withcryptocurrencies accounting for nearly half of the reclaimed sum.
Besides that, FTX is embroiled in lawsuits targeting alleged fraudulent asset transfers. These include substantial sums received by Bybit's Mirana Corp and Time Research before the bankruptcy. Additionally, creditors are evaluating the legality of recovering endorsement fees paid to athletes and sports clubs.
This article was written by Jared Kirui at www.financemagnates.com.
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