FTX creditors object to cash repayment: it will cause tax problems! Payment should be made in cryptocurrency

This site (120btC.coM): Since its collapse in November 2022, the restructuring team of bankrupt cryptocurrency exchange FTX is actively raising funds to repay creditors. According to the latest repayment plan released by the restructuring team last month, the estimated amount owed is US$11.2 billion, but after the assets are sold, there will be approximately US$14.5 billion to US$16.3 billion in cash available for compensation, so it is absolutely Most users (those who had held funds under $50,000) were able to receive cash compensation of approximately 118%.

However, it is important to clarify that the loss compensation is calculated based on the platform funds on the day FTX exercises Chapter 11 of the Bankruptcy Law. Therefore, unless the assets placed by users on FTX are stable coins, it is actually still a large amount of money. Loss (BTC was only worth US$17,000 at the time)...

The current progress is that creditors are expected to be repaid as soon as this year. However, the FTX creditor group voluntary by the community once again objected to the bankruptcy reorganization plan.

Not in the best interests of creditors

Sunil Kavuri, representative of the FTX creditor group, posted on the social platform yesterday (6th) that the FTX Creditors Committee (CAHC) was not satisfied with FTX’s bankruptcy reorganization plan. Objections were raised, with creditors rejecting the plan on a number of grounds:

• Repayment in cash would trigger a tax event, resulting in unnecessary costs for creditors, and repayment of assets in kind was suggested as an alternative.

• Creditors invoked Chapter 11 of the Bankruptcy Code to oppose the release of funds to the debtor (FTX Bankruptcy Reorganization Group), claiming that it was seeking to distribute stolen assets.

• Not in the best interests of creditors.

Additionally, Kavuri cited other objections including the need to update the Internal Revenue Service (IRS) settlement disclosure statement, undisclosed proceedings, inconsistent debtor liquidation analysis and timing concerns. objection.

Creditor losses exceeded US$10 billion

According to previous reports, Sunil Kavuri issued a document as early as the 8th of last month suggesting that creditors should vote against FTX’s restructuring plan: they should vote against the plan TICKET! FTX should pay for the original cryptocurrency in kind, not by its current USD value. FTX’s previous method of selling off assets also caused creditors to lose more than $10 billion in disguise. The money FTX owes creditors is actually 10 times the price on the petition!

It can be seen that most of Kavuri's assets when FTX collapsed were stored in the form of spot tokens, so he was particularly dissatisfied with this compensation plan.

Can FTX pay back more money?

On the other hand, FTX also ushered in major progress on tax issues. In April last year, the U.S. Internal Revenue Service (IRS) filed a claim against FTX, requesting the payment of $44 billion in unpaid taxes. , then the figure was revised to US$43 billion in September last year, and then revised downward to US$24 billion in November.

According to legal documents released on June 3, FTX plans to pay only $200 million of the IRS’s priority tax claims and $685 million of subordinate claims. Priority tax claims, such as taxes, must be paid among other debts. are paid before, whereas subordinate claims are paid only upon satisfaction of higher priority obligations.

This tax development has reduced FTX’s tax burden dozens of times, and whether FTX’s creditors can receive more compensation as a result deserves continued attention.

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