FTX Debtors Modify Settlement Proposal Following U.S. Trustee's Objection

Police & Regulations
Aug 21, 2023 at 10:06 am

The recent revision to the proposed settlement plan encompasses the inclusion of the U.S. Trustee as a well-informed participant and a reduction in the maximum sum for resolved claims from the original $10 million to $7 million.

FTX, the bankrupt cryptocurrency exchange, has implemented alterations to its suggested settlement strategy following objections raised by the U.S. Trustee, as detailed in a court submission on Sunday.

While expressing their discontent with the U.S. Trustee as the "sole opposing party to the Motion," which aimed to "interfere with a customary settlement process already adequately overseen by two separate creditor committees," the FTX debtors have introduced amendments to address the concerns expressed.

The updated proposition entails the participation of the U.S. Trustee as a well-informed party and a reduction in the maximum value for claims governed by the specific procedures, originally set at $10 million, now adjusted to $7 million. Furthermore, the debtors will provide monthly reports outlining executed settlements. Any objections raised by the "well-informed parties" must be resolved or settled through a court ruling prior to proceeding with the claims process.

The two creditor committees involved include the Official Committee of Unsecured Creditors and the ad hoc committee of international customers.

The U.S. Trustee's initial objection centered on the argument that the threshold of $10 million is excessively high to be categorized as a "small" claim, and that insufficient notice was given regarding the nature of these claims.

FTX, previously acknowledged as the world's third-largest digital assets exchange, filed for bankruptcy in November of the previous year.

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