FTX Modifies Settlement Proposal Following U.S. Trustee's Objection
Bankrupt cryptocurrency exchange FTX has made adjustments to its proposed settlement plan after facing objections from the U.S. Trustee. In response to criticism that the Trustee had voiced about the involvement of certain parties and the settlement threshold, FTX debtors have revised their terms.
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August 21, 2023
CoinDesk reported that FTX has adjusted its proposed settlement following an objection from the U.S. Trustee. This objection was outlined in a court filing on Sunday.
Although the FTX debtors criticized the U.S. Trustee for being the sole dissenter in the motion, accusing it of involving itself unnecessarily in an already well-protected routine settlement process managed by two distinct creditor committees, they have taken steps to address the concerns by presenting revised terms.
Under the updated proposal, the debtors intend to formally involve the U.S. Trustee as a party notified about the settlement and also intend to decrease the maximum value at which claims would be settled using the outlined procedures. This maximum value would now be reduced from the initial $10 million to $7 million. Additionally, the debtors are planning to submit regular reports on executed settlements. Any objections raised by these notified parties would need to be resolved or addressed through a court order before the claim process could proceed.
The two creditor committees involved in the process are the Official Committee of Unsecured Creditors and the ad hoc committee representing international customers.
The U.S. Trustee had previously raised concerns about the initial motion, arguing that a $10 million threshold for a "small" claim was excessively high, and there was insufficient information provided about the nature of the claims.
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