In a recent court filing on Sunday, creditors of the insolvent cryptocurrency exchange FTX have taken steps to modify their proposed settlement motion, responding to concerns raised by the U.S. Trustee. The Trustee had objected to an initial motion, prompting debtors to reevaluate their approach.
While expressing criticism of the U.S. Trustee for being the “sole objector to the Motion,” which seeks to insert itself into a settlement process already overseen by two distinct creditor committees, the debtors acknowledged their willingness to address the raised issues through revisions.
Debtors Revise Settlement Proposal Amid Crypto Exchange Bankruptcy
Under the updated proposal, the debtors are now set to formally involve the U.S. Trustee as a party to be informed, while also lowering the maximum value for settled claims from the previous $10 million to $7 million. Additionally, the debtors have committed to filing monthly reports detailing executed settlements. Any concerns raised by the aforementioned “noticed parties” would necessitate resolution through a court order before the claims process can proceed.
The Official Committee of Unsecured Creditors and the ad hoc Committee of international customers comprise the two creditor committees overseeing the settlement proceedings.
The U.S. Trustee’s objection to the initial motion stemmed from its view that $10 million was an excessively high threshold for defining a “small” claim. Moreover, the Trustee expressed concern over the lack of sufficient notification regarding the nature of these claims.
FTX, previously ranked as the world’s third-largest digital asset exchange, faced a financial collapse in November of the previous year.