FTX creditor claims have escalated to as high as 65 cents on the dollar, a notable increase from previous valuations. This development marks a substantial uplift of nearly 30% compared to figures just a month earlier.
The challenges with creditor claims
In late October, trades involving FTX’s over-the-counter (OTC) creditor claims were closing at rates above 50 cents on the dollar, indicating a rising trend in their perceived value.
Thomas Braziel, a debt claim specialist and partner at 117 Partners, has expressed optimism about the future trajectory of these claims. He anticipates the claims could eventually align with a recovery range of 80% to 90% or more.
However, Braziel also notes that achieving the higher end of the current offering range, which is between 60 to 65 cents on the dollar, may pose challenges for some creditors. According to him, only clean, multi-million dollar claims are likely to approach the 65-cent mark. This trend, he remarks, is becoming increasingly common among major distressed firms.
Rising hopes amid new investments
The context of these rising claim values traces back to January when an X poll revealed a majority of respondents only expected to recover about 25% of their lost funds with FTX. The recent surge in optimism among creditors can be partly attributed to Anthropic, an AI company in which FTX had invested significantly. Anthropic’s announcement of multiple large investments has fueled hopes that the sale of FTX’s stake in the company could contribute substantially to reimbursing creditors.
Meanwhile, FTX has been granted court approval to reimburse a group of non-US creditors who played a crucial role in resolving a settlement between competing groups of FTX customers. The reimbursement sums up to over $2 million in legal fees. Judge John Dorsey, a U.S. Bankruptcy Judge, gave his approval to FTX’s request at a hearing in Wilmington, Delaware. The payment will be made to an ad hoc group of non-US customers that represented 66 large account holders. These customers had cryptocurrency deposits worth over $1 billion on FTX’s international crypto exchange as part of a settlement of customer disputes.
