FTX debtors and UCC clash over asset control in restructuring
FTX debtors, led by CEO and chief restructuring officer John J. Ray III, have expressed disapproval of traders and market makers within the Official Committee of Unsecured Creditors (UCC) who are aiming to gain authority over assets. They believe the UCC’s plan to invest nearly $2.6 billion in cash reserves in short-term Treasurys is a bad idea amid the FTX 2.0 draft restructuring plan.
In a court filing dated August 9, FTX issued a response to the UCC’s commentary regarding the reorganization and term sheet proposal. FTX strongly criticized the UCC’s pursuit of asset control, particularly as it recommended that debtors allocate nearly $2.6 billion from cash reserves into short-term Treasurys, aiming to cover professional fees amounting to as much as $330 million.
Disputes have emerged between the UCC and debtors due to creditors asserting insufficient consultation and significant fund depletion by FTX during the bankruptcy filing. Nevertheless, the United States Securities Exchange Commission expressed dissatisfaction with what it said was the limited engagement and unprofessional behavior displayed by numerous UCC members.
FTX’s restructuring unit has reclaimed approximately $7 billion in liquid assets from the initial $8.7 billion owed to customers when the exchange entered bankruptcy proceedings. Certain creditors and specialists have reacted to FTX’s recent submission, contending that the debtors are impeding the reorganization process and refuting assertions made by the UCC.
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The debtors unveiled a strategy for the relaunch of FTX 2.0, with Ray endeavoring to finalize all agreements and outstanding remuneration to facilitate the launch. Kraken CEO Jesse Powell expressed skepticism about FTX 2.0, asserting that it’s “more challenging than commencing anew,” citing the lack of a team, technology, and licenses and the impairment of the brand’s reputation.
Meanwhile, FTX has submitted a request for the dismissal of the Chapter 11 bankruptcy proceedings involving FTX Exchange FZE (FTX Dubai), contending that the exchange never initiated the provision of cryptocurrency-related services to investors.
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FTX debtors express disapproval of UCC’s asset control
FTX debtors, led by CEO and chief restructuring officer John J. Ray III, are currently in a clash with traders and market makers within the UCC over asset control in the restructuring process. The debtors are strongly opposing the plan proposed by the UCC, which aims to invest nearly $2.6 billion of cash reserves in short-term Treasurys. They believe that this plan is not beneficial in the context of the FTX 2.0 draft restructuring plan.
FTX recently filed a court response dated August 9, criticizing the UCC’s pursuit of asset control. The debtors specifically disagreed with the UCC’s recommendation to allocate approximately $2.6 billion from cash reserves into short-term Treasurys to cover professional fees. They believe that this allocation is unnecessary and could hinder the restructuring process.
Disputes and dissatisfaction
The clashes between the UCC and FTX debtors have arisen due to allegations of insufficient consultation and significant fund depletion by FTX during the bankruptcy filing. The United States Securities Exchange Commission also expressed dissatisfaction with the limited engagement and unprofessional behavior displayed by several UCC members.
Despite these disputes, FTX’s restructuring unit has been able to reclaim around $7 billion in liquid assets from the initial $8.7 billion owed to customers at the start of the bankruptcy proceedings. However, certain creditors and specialists have criticized the debtors, claiming that they are obstructing the reorganization process and dismissing the UCC’s claims.
The strategy for FTX 2.0 relaunch
To move forward with the restructuring, the FTX debtors have unveiled a strategy for the relaunch of FTX 2.0. FTX CEO John J. Ray III is working on finalizing all agreements and outstanding remuneration to facilitate the launch. However, not everyone shares the same optimism for FTX 2.0.
Jesse Powell, CEO of Kraken, expressed skepticism about the relaunch, stating that it is “more challenging than commencing anew.” Powell highlighted issues such as the lack of a team, technology, licenses, and the impaired reputation of the FTX brand.
Request for dismissal of bankruptcy proceedings
In addition to the clashes over asset control, FTX has also submitted a request for the dismissal of the Chapter 11 bankruptcy proceedings involving FTX Exchange FZE (FTX Dubai). The exchange argues that it never provided cryptocurrency-related services to investors, making the bankruptcy proceedings unnecessary.
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