FTX Accuses Creditors Who Oppose Restart of Promoting Hidden Agendas

FTX debtors have accused a creditor panel of a power grab that ignores other stakeholders in the bankruptcy estate. They refute allegations that creditors were not consulted on how to maximize returns from the assets of FTX.

In addition, FTX lawyers claim hidden agendas are driving the protest against the firm’s restart. They point out that creditors previously opposed the sale of FTX assets at a discount to par.

Sponsored

id="h-ftx-concerned-over-lack-of-creditor-transparency">FTX Concerned Over Lack of Creditor Transparency

The FTX estate would need court permission to invest assets in Treasuries to yield higher returns for creditors. However, long-term treasuries offering the highest yields could render assets illiquid.

In their rebuttal, FTX voiced concern over the “delicate” issue of preventing market makers and traders from unfairly profiting from token sales.

FTX’s dispute with creditors started after it submitted a draft restructuring plan in July. The plan will satisfy creditor demands through business operations instead of a full liquidation of assets.

The exchange claimed creditors’ invisibility had so far frustrated the company’s restructuring plans.

Winding Up of Bankruptcy Estate Prioritizes Secured Creditors

According to Section 507 of the US bankruptcy code, preferred creditors get first preference in liquidation proceedings. Government agencies like the IRS can legally claim priority over secured and unsecured creditors.

The IRS has already filed papers to secure its share of FTX assets before other creditors.

Last year, former FTX CEO Sam Bankman-Fried extended a credit line to BlockFi. After BlockFi filed for bankruptcy last year, FTX was deemed an unsecured creditor, meaning it lent money without securing collateral that could be liquidated in the event of default.

In July, FTX protested the downgrading of its claims in the BlockFi bankruptcy. According to the estate administrators, BlockFi had unfairly lumped its claim payouts as part of a rushed liquidation plan.

According to FTX, the plan bypassed the need for judges to answer “novel questions of law” that will only be clarified when Bankman-Fried goes to trial in October.

Got something to say about FTX creditors or anything else? Write to us or join the discussion on our Telegram channel. You can also catch us on TikTok, Facebook, or X (Twitter).

The post FTX Accuses Creditors Who Oppose Restart of Promoting Hidden Agendas appeared first on bitcoinlinux.