The attorneys for the bankrupt cryptocurrency exchange FTX, which filed for Chapter 11 protection in November and collapsed shortly after, have responded to the draught reorganisation proposals of the creditor panel, rejecting the committee’s assertions over FTX’s lack of participation.
On Wednesday, FTX administrators submitted their reply to the Delaware US District Court. The attorneys disputed the Official Committee of Unsecured Creditors’ allegations that FTX debtors did not participate in the reorganisation plan’s development.
Hence, the Debtors are obliged to address the erroneous and unjust remarks present throughout the Committee’s submission, and they express significant dismay in doing so.
The preliminary reorganisation plan that FTX’s new management team, led by John J. Ray III, released last month sparked a disagreement between the administrators of the company and the creditor panel. The business’s claimants had the choice to own equity securities, tokens, or other interests in a newly founded offshore corporation under the “reboot” concept.
FTX’s official creditor committee responded shortly after the bankruptcy departure plan was made public, alleging that in spite of numerous requests and prior assurances from the team, it “did not have a single call or meeting” with FTX to discuss its detailed Chapter 11 strategy.
Simply enough, the committee stated, “the defendants chose to publicly file their ideas for a plan.”
Sam Bankman-Fried, the disgraced founder and former CEO of FTX, will go on trial on October 2 for a number of offences that might result in a life sentence.
Debtors of FTX are “frustrated.”
The FTX debtors expressed their frustration with the committee members in the rebutted answer, stating in a footnote that several of the committee members refused to see the borrowers in person and that some even avoided eye contact during Zoom meetings.
While the Debtors and members of the Committee have upheld a productive and professional collaboration, as outlined in the court order, there have been instances when specific Committee members have exhibited inappropriate behaviour that hampers the process and disrupts communication between the Debtors and the Committee.
Furthermore, FTX attorneys have indicated that creditors have imposed limitations on selling assets, which could have generated significant liquidity for the estate well above their nominal value. These restrictions have caused a delay in the sensible conversion of tokens into currency, as a more favourable approach has been taken in favour of retaining substantial holdings in prominent cryptocurrencies.
The creditor’s panel, which was described as being “populated by traders and market makers,” would be willing to “gamble estate assets on higher returns,” they claimed. However, the FTX debtors made it clear that they disagreed with this strategy.
The debtors concluded by saying that “claiming a lack of engagement when the facts clearly demonstrate the opposite” demonstrates a desire to seize control of the debtors’ enormous liquid assets “regardless of the potential impact on other stakeholders.”