FTX Creditors Express ‘Cautious Support’ for Extension of Chapter 11 Plans and Opinions

04/10/2023 04:09 • Blockchain Briefs • 115 views

On April 10th, the FTX creditor @ AFTXcredit tweeted that the FTX Unsecured Creditors’ Official Committee (UCC) had submitted a statement last week expressing “cautious support” for the FTX debtor’s request to extend its exclusive period for submitting Chapter 11 plans and soliciting opinions, But we reserve the right to seek termination of the FTX exclusive period within the future extension period (if there is no significant progress in the restructuring plan).

FTX response to UCC: A roadmap with expected timeline has already been provided, and progress will be reported at this week’s hearing

Introduction

On April 10th, the FTX creditor @ AFTXcredit tweeted that the FTX Unsecured Creditors’ Official Committee (UCC) had submitted a statement last week expressing “cautious support” for the FTX debtor’s request to extend its exclusive period for submitting Chapter 11 plans and soliciting opinions. This article will explore what the FTX Chapter 11 case is and why the creditors are expressing cautious support for the extension of its exclusive period.

What is the FTX Chapter 11 Case?

FTX is a cryptocurrency trading platform founded in 2019 by Sam Bankman-Fried and Gary Wang. The platform has rapidly grown since its inception and reported a daily trading volume of $10 billion in March 2021. However, in November 2020, the FTX parent company, FTX Trading Ltd., filed for Chapter 11 bankruptcy in the United States Bankruptcy Court for the Northern District of California.
Chapter 11 is a section of United States bankruptcy law that allows businesses to restructure their debts and stay in operation. The debtor tries to negotiate a repayment plan with its creditors, which must be approved by the court. During the process, the debtor has an exclusive period to submit Chapter 11 plans and solicit opinions from creditors.

Why are the Creditors Expressing ‘Cautious Support’ for the Extension of the Exclusive Period?

The FTX UCC has stated that they will grant the debtor’s request to extend its exclusive period for submitting Chapter 11 plans and soliciting opinions, but they reserve the right to seek termination of the FTX exclusive period within the future extension period if there is no significant progress in the restructuring plan.
The creditors’ cautious support is understandable considering the complexity of the FTX Chapter 11 case. As of March 2021, the FTX debtor reported over $100 million in consolidated assets and over $160 million in consolidated liabilities. Moreover, the debtor has multiple stakeholders, including investors, lenders, and users.
In addition, the FTX Chapter 11 case involves the cryptocurrency industry, which is still largely unregulated. The Bankruptcy Code does not have provisions that explicitly address cryptocurrencies, and there is no clarity on how cryptocurrencies will be treated in bankruptcy proceedings. Therefore, the FTX debtor and its creditors must navigate uncharted legal territory, which makes the restructuring process more challenging.

What Happens Next?

The FTX debtor has until May 14th, 2021, to submit its Chapter 11 plan, which will outline how it plans to restructure its debts and repay its creditors. After the filing, the creditors will have an opportunity to accept or reject the plan. If the plan is accepted, it will be implemented under court supervision.
On the other hand, if the creditors reject the plan, the debtor may convert the case to a Chapter 7 bankruptcy, which would require the liquidation of the debtor’s assets to repay its creditors.

Conclusion

The FTX Chapter 11 case is a complex legal matter that involves multiple stakeholders and the cryptocurrency industry’s unique challenges. The creditors’ cautious support for the extension of the exclusive period is understandable, considering the case’s complexity and uncharted legal territory.

FAQs

1. What is FTX?
FTX is a cryptocurrency trading platform founded in 2019 by Sam Bankman-Fried and Gary Wang.
2. What is Chapter 11 bankruptcy?
Chapter 11 is a section of United States bankruptcy law that allows businesses to restructure their debts and stay in operation.
3. What happens if the creditors reject the Chapter 11 plan?
If the creditors reject the plan, the debtor may convert the case to a Chapter 7 bankruptcy, which would require the liquidation of the debtor’s assets to repay its creditors.
**Keywords:** FTX, Chapter 11, bankruptcy, cryptocurrency, creditors, restructuring.

This article and pictures are from the Internet and do not represent aiwaka's position. If you infringe, please contact us to delete:https://www.aiwaka.com/2023/04/10/ftx-creditors-express-cautious-support-for-extension-of-chapter-11-plans-and-opinions/

It is strongly recommended that you study, review, analyze and verify the content independently, use the relevant data and content carefully, and bear all risks arising therefrom.