- The trustee Andrew Vara and other creditors have pointed out many problems.
- FTX said that its restructuring plan had received preliminary approval from all eligible creditors.
A new development has occurred in the ongoing FTX restructuring proceedings; the case’s United States trustee has voiced strong concerns to the crypto exchange’s revised reorganization plan. Although the FTX estate claims that the proposed plan has the backing of many creditors. The trustee Andrew Vara and other creditors have pointed out many problems with it in formal objections.
This comes after insolvent cryptocurrency exchange FTX said that its revised restructuring plan had received preliminary approval from all eligible creditors.
Imbalances Highlighted
The restructuring plan’s planned legal exclusions are a major source of worry for the trustee. According to Vara, the plan provides the administrators and counselors of the estate with an excessive amount of legal protection.
He argues that these safeguards are far more extensive than what is normally provided to estate professionals by the applicable laws. According to Vara’s submission, this level of immunity would be far more extensive than the safeguards enjoyed by estate professionals. Whose work is subject to Court review and approval.
The trustee has also brought up an important point about how creditors are being treated differently. Depending on the amount of their claims. Vara notes that bigger creditors may get up to 143% repayment, while smaller creditors, with claims typically around $50,000, would get just 119%.
Given that the FTX estate is anticipated to possess the funds to pay all creditors equally, Vara contends that this imbalance is particularly unwarranted. In his challenge to the planned distribution method, Vara argued that the legal characteristics of these consumers’ claims were identical.
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