FTX creditor group files objection against bankruptcy reorganization plan

Share This Post

A group of FTX creditors led by Sunil Kavuri has objected to the reorganization plan filed by the defunct exchange’s bankruptcy managers.

According to a June 5 court filing, the creditors argued that the plan failed the best interest test. Justifying the objection, Sunil noted that it is unconfirmable as a matter of law as it includes releases not in the interest of the estate. He added that the plan also ignores property rights issues.

Notably, the creditors argued that FTX’s cash repayment would force a taxable event that could be avoided through in-kind repayment. As such, creditors would be forced to pay tax on declared gains upon the cash receipts. They wrote:

“Because the Debtors state that they will take the position that this ‘forced exchange’ is a taxable event, it will inflict additional hardships on customers through forced taxation that could be avoided by making an ‘in kind’ distribution.”

Kavuri made reference to the current lawsuit against the estate’s law firm, Sullivan & Cromwell, over its ties to the exchange prior to its collapse. He claimed that the plan included an exculpation clause “so they and no one involved [can be] sued for misconduct.”

The creditors further stated that FTX must update the disclosure statement for the Internal Revenue Service (IRS) settlement and include the examiner report. The objection follows a recent agreement to settle tax claims with the IRS.

The settlement plan will see the IRS receive a $200 million priority claim within 60 days after the approval. Additionally, they also receive another $685 million lower-priority claim paid after customers have been fully paid.

On May 7, FTX bankruptcy managers announced a reorganization plan that would see creditors gain full cash repayment. Per the plan, creditors with claims below $50,000 would be eligible for a 118% recovery within 60 days of the court approval.

Similarly, other non-governmental creditors would also receive their total claims with up to 9% interest as compensation.

The post FTX creditor group files objection against bankruptcy reorganization plan appeared first on CryptoSlate.

Read Entire Article
spot_img
- Advertisement -spot_img

Related Posts

Cardano (ADA) Eyes 20% Price Surge – Funding Rate Suggests Increasing Demand

Cardano is trading at a crucial supply level that could spark a significant rally to new highs After last week’s interest rate cut, optimism has surged among analysts and investors, with many

Crypto Analyst Predicts What Will Drive The Ethereum Price Back Above $3,000 Again

Ethereum, the second-largest cryptocurrency by market capitalization, has yet to reclaim the $3,000 price level since early August Since the beginning of September, Ethereum has mostly traded below

Phantom Wallet Joins Dydx, Easing Access for 7 Million Users

Dydx has announced its integration of the Phantom Wallet, a leading Solana-based non-custodial wallet, into its decentralized finance (defi) platform This integration aims to simplify access for over

TruFlation offers $500K bounty to recover funds stolen in hack

Truflation, a decentralized data company, has posted a $500,000 bounty following a $5 million hack on Sept 25 The firm is offering a reward for returning the stolen funds or for identifying the

Hut 8 Launches GPU-as-a-Service Vertical, Deploys 1,000 Nvidia GPUs

Hut 8 Corp has officially launched its GPU-as-a-service vertical, marking a significant step in the company’s diversification efforts The deployment includes 1,000 Nvidia H100 graphics

Bitcoin daily close above $65,000 is ‘pivotal’ to start an upward movement – Kraken

Bitcoin (BTC) is currently testing a key resistance level at $65,000 that is “pivotal” to market sentiment, according to a recent report published by Kraken on Sept 26 The report noted that