FTX Proposes Amended Chapter 11 Bankruptcy Plan To Pay Back Creditors

By: Alex Trent | Published: May 08, 2024

Cryptocurrency exchange and trading company FTX has filed an amended bankruptcy plan that it says will be more than enough to pay many of its creditors.

The company previously held a lofty spot in the crypto world before a collapse in November 2022 when allegations emerged that the company had been misusing customer funds.

FTX Statement

In a statement by FTX, the company anticipates that it will be able to pay many of its creditors in full.

An artists representation of popular crypto coins like Bitcoin and Ethereum.

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“The plan contemplates payment in full of all non-governmental creditors based on the value of their claims as determined by the (relevant) bankruptcy court,” the statement said.


Consensus Rate

For governmental creditors, the bankruptcy plan will guarantee a payment of interest up to a consensus rate.

A row of $100 dollar bills pictured on top of one another.

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“In addition, the Plan contemplates a subordination arrangement with governmental creditors that allows payment of interest to the primary classes of customers and creditors at up to a 9% rate (the “Consensus Rate”) from the commencement of the chapter 11 cases through the date of distribution,” said the statement.

Court Approval

The bankruptcy proposal would still need to be approved by a US court before it can be accepted. If accepted it would allow an easier resolution to disputes by affected parties without needing to engage in their own litigation efforts.

A wooden gavel rests on its sound block on a desk, with the blurred figure of a judge in a black robe writing on papers in the background


This proposal comes 17 months after FTX originally filed for Chapter 11 bankruptcy in a court in the District of Deleware.

Good News For Creditors

According to the statement, “98% of FTX creditors” will receive at least “118% of allowed claims in cash within 60 days of effectiveness.”

Close-up of a person's hands as they count a stack of US dollar bills. The person is wearing a dark blue shirt, and their fingernails are painted in a light color

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FTX also promises that “other creditors” will receive “100% of allowed claims plus billions in compensation for the time value of their investments.”

Convenience Class

For the 98% group of creditors, FTX put them in a special class that will help resolve claims faster.

Two people shake hands while exchanging cash

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“For creditors holding claims in an allowed amount of $50,000 or less, the Plan creates a special “convenience class”…if the Plan is approved by the Bankruptcy Court, the Debtors anticipate that 98% of the creditors of FTX by number will receive approximately 118% of the amount of their allowed claims within 60 days after the effective date of the Plan, subject to know-your-client and distribution information requirements,” said the statement.


Crypto Fall

FTX’s sudden fall caused a huge impact in the crypto world with the scars of the incident still being felt. 

The symbol of cryptocurrency Bitcoin in front of a monitor.

Source: MIT Bitcoin Club/Wikimedia

In October, Reuters reported that Bitcoin had lost more than 65% of its value since the previous year, and while things have been slowly bouncing back, recovery has been slow for the market.


Former FTX CEO

Former FTX CEO Sam Bankman-Fried was later found guilty for seven counts of fraud of fraud and conspiracy on allegations that he had been part of a scheme to steal billions from customer accounts and defraud lenders.

A photo taken of Sam Bankman-Fried at a Bitcoin conference in 2021.

Source: Cointelegraph/Wikimedia

In March, Bankman-Fried was sentenced to 25 years in prison.


Recovered Assets

What makes this new FTX amended proposal for bankruptcy possible is that the company has been able to recover a significant number of assets.

A man holding cash and his phone in his hand.


“FTX forecasts that the total value of property collected, converted to cash and available for distribution will be between $14.5 and $16.3 billion,” the company said.


New Management

FTX gained a new CEO in the wake of the company’s collapse in November 2022, who was shocked by the scale of dysfunction.

The logo for the FTX crypto company.

Source: Mariia Shalabaieva/Unsplash

“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here,” said FTX CEO John J. Ray III.


Happy To Clean the Mess

In a statement commenting on the new bankruptcy plan, Ray was optimistic about FTX’s ability to deliver.

Several overlapping white papers with black text are laid out on a dark blue background. The top sheet prominently displays the title "PETITION TO FILE FOR BANKRUPTCY" in bold, black lettering

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“We are pleased to be in a position to propose a chapter 11 plan that contemplates the return of 100% of bankruptcy claim amounts plus interest for non-governmental creditors,” Ray said in a statement.


Going Forward

The hearing to decide whether to move forward with this new bankruptcy proposal has been set for June 25.

A stack of coins representing crypto currency.

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It’s unclear if FTX can rebuild trust with customers after nearly two years of creditors being unable to get their money back. However, many will no doubt be relieved by the possibility of receiving convenient and expedited payments above their original cash claims.