FTX, the cryptocurrency exchange that went bankrupt, has changed its deadline for creditors to submit their debt claims.
This adjustment gives creditors more time to lodge their claims amidst ongoing financial proceedings aimed at resolving the fallout from FTX’s collapse.
Deadline Adjustment Unveiled
Initially, FTX creditors had a specific cutoff date to file their claims, but that has now been pushed to late July or early August.
The extension aligns with the voting deadline set for creditors to approve a Chapter 11 reorganization plan in the United States.
Essentially, this allows additional weeks for the stakeholders to prepare and submit their claims under the Bahamas liquidation process, which operates in parallel but independently from the U.S. proceedings.
The change was communicated to customers and creditors through an update, explaining that this new timeline would provide them with 10 to 12 more weeks to submit their claims.
Customers of FTX, also known as FTX International, are given the choice to engage in either the Bahamas or U.S. process, with clear stipulations that participation in both is not permitted.
Details and implications of choosing between the two processes will be outlined in upcoming disclosures, expected to be sent in June, offering customers between six to eight weeks from that point to make their final decisions.
Mixed Reactions and Further Plans
The decision to extend the debt submission deadline has received mixed reactions from the crypto community. Some see it as a positive step toward making things right for those affected by the company’s collapse.
However, there’s a notable level of dissatisfaction among creditors, driven by uncertainties over the distribution process and potential delays in receiving payments.
Sunil, a popular creditor, has expressed major concerns over the proposed plans by Sullivan and Cromwell (S&C), the legal team representing the debtors.
Allegations have surfaced suggesting that S&C’s actions have potentially caused damages exceeding $10 billion to FTX creditors.
Moreover, Sam Bankman-Fried, FTX’s founder, is in jail under some serious degrading circumstances. In an unusual turn of events compared to typical bankruptcy scenarios, FTX plans to allocate massive cash reserves toward paying interest to its approximately 2 million customers.
This plan comes after the liquidation of all assets, with the exchange expecting to have about $16.3 billion in cash reserves available for distribution. The total outstanding debts are estimated at around $11 billion, owed to customers and other non-governmental creditors.
