FTX Ad Hoc Committee Prepares Amended Reorganization Plans Set for December

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The FTX 2.0 customer ad hoc committee of the now-defunct crypto exchange has received a response to the letter sent to its official arm.

In a letter dated December 4, 2023, the Official Committee of Unsecured Creditors (UCC), overseeing the bankruptcy of the FTX exchange, acknowledged the concerns raised by its ad hoc arm.

Led by Ken Pasquale of Paul Hastings LLP, the UCC stated that it is actively working behind the scenes to ensure an expeditious bankruptcy process.

Regarding unsecured creditors, the committee mentioned considering the option of “recovering rights tokens” to maximize their return on value. However, it indicated that specific details would remain confidential due to legal obligations.

While both committees are exploring avenues to assist investors defrauded following the collapse of the Sam Bankman-Fried (SBF)-led platform, the UCC confirmed divergent views on how assets should be valued and redistributed in the reorganization plan.

Nevertheless, the committee aims to submit an amended reorganization plan to the Bankruptcy Court in mid-December.

This is expected to provide further details on the committee’s recommendations. However, it stated that it is open to exploring other reasonable alternatives that can improve the terms of the proposed plan.

The letter also touched on the subject of a potential acquisition by a third party, indicating that the process is still ongoing.

In a November 2022 press release, FTX announced engaging Perella Weinberg Partners (PWP) as a lead investment bank in preparation for sale or reorganization. However, the purchase by PWP is still subject to the court’s approval.

This announcement was made following the kickstarting of the bankruptcy proceedings. The press release also revealed that 101 of its 130 affiliated companies would undergo a global strategic asset review.

1/ Sharing a Press Release issued early today –

FTX launches strategic review of its global assets. Text below (and link). https://t.co/wxz9MYnXrn

— FTX (@FTX_Official) November 19, 2022

Addressing this event, Mr. John J. Ray III, serving as the interim CEO of FTX, said that he has instructed the team at FTX Debtors to prioritize the preservation of franchise value.

“I respectfully ask all employees, vendors, customers, regulators, and government stakeholders to be patient with us as we put in place the arrangement that corporate governance failures at FTX prevented us from putting in place prior to filing our Chapter 11 cases,” Ray added.

Meanwhile, the global asset review revealed that many of the exchange’s affiliates have solvent balance sheets, putting them in a viable position to continue operating.

Regulators Welcome FTX Reboot

Despite the historically challenging stance of US government agencies towards crypto-related companies, there seems to be a potential shift in sentiment towards the emerging industry.

Speaking in a CNBC special appearance, US Securities and Exchange Commission (SEC) head Gary Gensler expressed openness to a possible FTX reboot in the future.

According to the former blockchain professor at MIT, the return of FTX would be a welcome development as long as it aligns with legal regulations.

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