FTX overhauls settlement proposal amidst U.S. Trustee objection
- FTX was revising its settlement proposal as a response to U.S. Trustee objections.
- The bankrupt exchange sought a transparent and balanced creditor claims resolution.
Bankrupt cryptocurrency exchange FTX has made revisions to its settlement proposal following objections from the U.S. Trustee, as per a court filing on 20 August. The exchange faced criticism from the U.S. Trustee previously for its earlier settlement motion, which led to the debtors revising their approach in order to address concerns.
The FTX debtors, while expressing dissatisfaction with the U.S. Trustee’s involvement in what they considered a routine settlement process with existing creditor committees, have taken steps to address the objections raised. The revised proposal now involves including the U.S. Trustee as a noticed party and reducing the maximum settled claim value from the initial $10 million to $7 million.
In addition to these changes, the debtors have committed to filing monthly reports detailing executed settlements. This approach aims to enhance transparency and ensure proper oversight throughout the settlement process. The “noticed parties” will need to resolve or settle any objections through a court order before the claim process can proceed.
Exchange responds to concerns, revises plan for creditor claims process
Two distinct creditor committees, the Official Committee of Unsecured Creditors and the ad hoc committee of international customers, support the settlement procedures. These committees play a pivotal role in safeguarding the interests of the creditors and ensuring fair and equitable proceedings.
The objection raised by the U.S. Trustee centered on the perceived high threshold of $10 million for a claim to be considered “small.”
This objection was coupled with concerns regarding the lack of adequate notice regarding the nature of the claims. These concerns led the FTX debtors to revise their proposal, indicating a willingness to engage constructively with the U.S. Trustee’s observations.
FTX, once one of the world’s largest digital assets exchanges, faced financial turmoil that eventually led to its declaration of bankruptcy in November of the previous year. The exchange’s bankruptcy filing marked a significant development within the cryptocurrency industry.
By involving the U.S. Trustee as a noticed party and adjusting the maximum claim value, FTX aims to find a balance that accommodates both creditor interests and regulatory considerations. As the bankruptcy proceedings continue, these revisions mark a step forward in the effort to navigate the complex process of resolving creditor claims and managing the fallout of FTX’s financial difficulties.