FTX considers a revamp – Will it give the troubled exchange a second chance?

• The exchange has been exploring several proposals for its future direction.
• The question of whether to retain redacted customer information is a pivotal part of the discussions.

FTX [FTT] is actively considering multiple strategies for its future, including a potential partnership, sale, or independent reorganization, according to Bloomberg.

During a hearing before a Delaware judge, Kevin Cofsky, a partner at investment bank Perella Weinberg Partners revealed that FTX might announce a stalking horse bid for its assets on 16 December.

Furthermore, the exchange has been exploring several proposals for its future direction. An ongoing debate revolves around whether to keep customer personal information redacted, with legal discussions highlighting the potential value of this data for FTX’s future plans.

Partnership, sale, or independent reorganization on the horizon

Perella Weinberg Partners, tasked with investigating restructuring and capital market opportunities for FTX Group, has been engaging with various parties interested in acquiring the exchange’s legacy assets or partnering with the debtors for a potential relaunch.

The evaluation process includes assessing the feasibility of reorganizing the assets as an independent entity.

The question of whether to retain redacted customer information is a pivotal part of the discussions about FTX’s future. Lawyers representing FTX had previously argued that customer data was invaluable for their future endeavors.

They stated that the immediate release of institutional customer names could be detrimental and undermine ongoing efforts to monetize FTX’s exchange assets.

Cofsky reiterated the importance of retaining customer identities, emphasizing the high value and significance of this information to the estate. He maintained this view, which had not changed since the summer, during the hearing.

FTX had initially sealed the customer list. However, arguments were made, citing bankruptcy precedents, and supported by certain media outlets, for the release of this information. In response, Judge Dorsey approved an order to keep customer data redacted for the next 90 days.

The debate about customer information also hinges on the potential value of the exchange’s assets. The judge acknowledged that at least three parties have expressed interest in acquiring the platform.

Agreed “Amended Plan” in the works

FTX and its affiliated debtors proposed a “Customer Shortfall Settlement” last week to address long-standing customer property disputes. This settlement, part of an “Amended Plan,” is expected to be submitted to the Bankruptcy Court by 16 December.

If approved, it could lead to the confirmation of the Amended Plan in the second quarter of 2024.

The agreement establishes an equitable but unsecured claim for customers against FTX Debtors, ensuring a fair resolution for property interests.

Customer recoveries are estimated at around $8.9 billion for FTX.com customers and $166 million for FTX US customers, with potential approval by 2024.