FTX creditors oppose bankruptcy reorganization plan, saying cash repayment will result in additional taxes

The FTX creditor group, led by Sunil Kavuri, opposes the reorganization plan proposed by the FTX bankruptcy administrator. According to documents filed with the court on June 5, creditors pointed out that the plan did not pass the best interest test, contained provisions that were not in the interests of creditors, and ignored property rights issues. Creditors said that cash repayments would result in customers being required to pay taxes on the cash received. They proposed to adopt in-kind repayments to avoid tax issues. Creditors further stated that FTX must update the disclosure statement of the settlement with the Internal Revenue Service (IRS). Under the settlement plan, the IRS will receive $200 million in priority claims within 60 days of approval. Another $685 million in junior priority claims will be paid after customers are fully repaid. On May 7, the FTX bankruptcy administrator announced a reorganization plan, and creditors will receive full cash repayments. Under the plan, creditors with claims less than $50,000 will be eligible for 118% compensation within 60 days of court approval. Other non-government creditors will also receive full compensation and interest compensation of up to 9%. (CryptoSlate)