FTX Customers Unhappy with Bankruptcy Exit Plan

The exchange’s proposed bankruptcy exit plan, according to a group representing FTX customers, has left them “extremely disappointed” and the exchange’s restructuring team has ignored it.

FTX’s Official Committee of Unsecured Creditors (UCC) stated in a court filing dated July 31 that despite repeated requests and promises from the team, it “did not have a single call or meeting” with FTX to discuss its draft Chapter 11 plan.

The plan outlines and classifies customer claims and creates a roadmap for FTX’s relaunch as an offshore exchange. The UCC warned that it would submit its proposal to FTX customers for a vote if it continued to be disregarded.

Excerpt of the UCC’s filing claiming FTX’s restructuring team did not properly consult it. Source: Kroll

The UCC objected to what it deemed to be a late submission of the plan that gave “the appearance of progress.” It clarified that the plan was unilateral and largely disregarded suggestions raised by the UCC during discussions.

“Put simply, the Debtors chose to publicly file their ideas for a plan.”

Another concern was that the plan did not designate a person with pertinent crypto experience to manage a potential relaunch of FTX.

The plan should also create a regulatory-compliant recovery token and allocate value to customers most affected by FTX’s collapse to obtain the support of “millions of customers and creditors whose votes are necessary to confirm a plan,” according to the report.

In addition, the UCC claimed that the current plan would incur additional expenses and delays. Ultimately, it contended that it would be compelled to propose a plan “for which customers and creditors will vote in favor.”

It was appreciative, however, that the restructuring team indicated a willingness to amend the plan to incorporate the UCC’s recommendations and stated that negotiations would commence very shortly.

“This will require the Debtors’ willingness to listen and engage without attempting to substitute their judgment for that of the parties who truly understand the cryptocurrency markets,” the document continued.