FTX’s Deadline Extension for Creditors

FTX, the cryptocurrency exchange that went bankrupt, has extended the deadline for creditors to submit their debt claims. This change gives creditors more time to file their claims during ongoing financial proceedings to address FTX’s collapse.

Originally, FTX set a specific date for creditors to submit their claims, but this has now been moved to late July or early August. This extension aligns with the voting deadline for creditors to approve a Chapter 11 reorganization plan in the U.S. 

Essentially, this allows additional weeks for stakeholders to prepare and submit their claims under the Bahamas liquidation process, which operates independently from the U.S. proceedings.

The update was communicated to customers and creditors, explaining that the new timeline gives them 10 to 12 more weeks to submit their claims. 

Customers of FTX, also known as FTX International, can choose to engage in either the Bahamas or U.S. process but cannot participate in both. Details on choosing between the two processes will be provided in June, giving customers six to eight weeks to decide.

The decision to extend the debt submission deadline has received mixed reactions from the crypto community. Some see it as a positive step for those affected by the company's collapse. However, many creditors are unhappy due to uncertainties over the distribution process and potential delays in receiving payments.

Sunil, a well-known creditor, has expressed major concerns about the plans proposed by Sullivan and Cromwell (S&C), the legal team representing the debtors. Allegations suggest that S&C’s actions have potentially caused damages exceeding $10 billion to FTX creditors.

Additionally, Sam Bankman-Fried, FTX’s founder, is currently in jail under serious conditions. Unusually for bankruptcy scenarios, FTX plans to use its cash reserves to pay interest to its approximately 2 million customers. 

After liquidating all assets, FTX expects to have about $16.3 billion in cash reserves for distribution. The total outstanding debts are estimated to be around $11 billion, owed to customers and other non-governmental creditors.