FTX Creditors Set to Receive $5 Billion by May 30 in Upcoming Distribution Round

The FTX Recovery Trust is set to initiate the distribution of more than $5 billion to creditors starting May 30 as part of the company’s Chapter 11 reorganization efforts, as stated in a recent announcement from the Trust.

Eligible holders of claims in both Convenience and Non-Convenience Classes who have fulfilled the necessary pre-distribution requirements will be entitled to receive these funds.

This distribution represents the second official payment cycle since FTX entered bankruptcy. Payments will be facilitated to qualifying claimants via designated Distribution Service Providers, BitGo and Kraken, within one to three business days after the distribution date.

Key development in recovery efforts

John J. Ray III, the Plan Administrator for FTX Recovery Trust, remarked that these distributions signify a significant advancement in executing a complex creditor payment operation, given the extensive range of creditors involved.

He emphasized that the upcoming disbursements for the non-convenience class are “an important milestone for FTX,” praising professional recovery teams for their ability to manage the extensive coordination required. The payments set for May 30 follow an earlier distribution phase that commenced in February aimed at smaller creditors.

During this initial phase, creditors with approved claims below $50,000 began receiving full reimbursements along with 9% annual interest accrued since filing for bankruptcy in November 2022.

Customers who registered with either BitGo or Kraken as their provider will receive payments directly from these platforms. By selecting a provider, customers relinquished their right to direct cash distributions from FTX and directed the firm to transfer funds to their chosen platform.

The Trust will announce additional payment dates as the distribution process continues.

Details of distribution percentages

As per the guidelines outlined in the reorganization plan’s payment structure, Class 5A Dotcom Customer Entitlement Claims are set to receive 72% of the total, while US-based Class 5B Customer Entitlement Claims will receive 54%.

Class 6A General Unsecured Claims and Class 6B Digital Asset Loan Claims are slated for a 61% payout, with Class 7 Convenience Claims, often associated with smaller claims, set to receive a payout of 120%.

While the first wave of repayments covered all small creditors, those with claims exceeding $50,000 are expected to receive their distributions in subsequent rounds. A total of $16 billion has been earmarked for these repayments.

Some creditors have expressed dissatisfaction with the delays; however, bankruptcy filings suggest that the estate has recovered more than initially anticipated, enabling more extensive repayment initiatives than originally planned.