Shareholder Exclusive Fund
This agreement was disclosed in recent documents, catching creditors off guard, as typically in bankruptcy proceedings, creditors are prioritized over shareholders for repayment. Before the voting deadline on August 16, creditors overwhelmingly approved the plan without knowing of this clause. Sunil Kavuri, a representative of FTX's largest creditor group, stated:
"Ordinary creditors had no input at all, and my FTX clients have expressed that they feel deceived and plundered by the restructuring team once again."
According to the agreement, the FTX restructuring team allocated 18% of the proceeds from government seizure actions to a dedicated fund, providing "exclusive benefits" to certain shareholders, totaling up to $230 million. Although this agreement was officially signed on August 28, nearly two weeks after the creditors' voting deadline, it was not disclosed until September 27, as stipulated in the agreement. Notably, September 27 was the 30th day on which the estate was allowed to submit a revised plan, and also the last day.
Government Seized Assets
In documents from June, the FTX restructuring team estimated the proceeds from the "government seizure actions": approximately $626 million came from Robinhood shares purchased by Emergent entities; about $379 million in fiat and digital assets, which "came from funds seized from certain accounts at third-party cryptocurrency exchanges" (as of June); approximately $150 million in cash, "from accounts registered under FTX DM"; and "two private jets purchased using about $35 million in leftover assets."
The total estimated value of these assets as of June was approximately $1.19 billion, of which 18% amounts to $214.2 million, aligning with the maximum amount of $230 million specified in the agreement. The plan also stipulates that shareholders can receive up to $250,000 in legal fees from this dedicated fund.
Current Restructuring Plan
Under FTX's current bankruptcy restructuring plan, 98% of creditors will receive at least 118% of their claim value (calculated at market prices at the time of bankruptcy). However, Sunil Kavuri believes that since bankruptcy claims are assessed based on the value of the relevant cryptocurrency at the time of bankruptcy, creditors will actually only recover "about 10% to 25% of the cryptocurrency."
For example, at the time of FTX's bankruptcy, Bitcoin was priced at around $16,000, subsequently rising to nearly $66,000. According to the plan, a creditor who lost 1 BTC due to bankruptcy will only receive $16,000, approximately 24% of the original asset value.
The confirmation hearing for the FTX restructuring plan is currently scheduled for October 7 at 10 AM Eastern Time, during which Judge John Dorsey of the U.S. Bankruptcy Court for Delaware will decide whether to approve the plan. According to legal requirements, the FTX estate must report the complete results of the creditors' vote by September 30 (seven days before the hearing), which is also the deadline for the restructuring team to submit responses to objections to support the confirmation of the plan.