Well, well, looks like FTX claims are having a field day, soaring above 100 cents to a dollar after the estate’s draft recovery plan was made public. Talk about optimism! The plan estimates that most creditors will be sipping on a recovery rate of 118%. Looks like we will be experiencing massing payouts to FTX investors soon.
According to the crypto bankruptcy gossip mill, Xclaim, FTX claims are now strutting around, flaunting price tags with rates ranging from 101% and 112%. It’s like watching a bidding war at a yard sale, but with digital assets in focus.
“It’s absolutely bonkers,” exclaimed Thomas Braziel, a partner at 117 Partners and 507 Capital, who’s neck-deep in distressed assets. “I mean, Lehman was floating at 141 cents on the dollar, and that saga lasted a whopping 10 years. Now we’re talking about 142% as the projected high number. It’s like the Wild West out here, folks!”
Braziel spilled the tea, revealing that claims have been buzzing since the draft plan dropped. He’s been taking calls left and right, including one from a $125 million claimant, a $40 million claimant, and a $10 million claimant. Looks like everyone’s trying to cash in on the crypto craze – all at once.
He boldly proclaimed that with distressed asset investors holding a chunk of the docket and a hefty percentage of claims in stablecoins, any pushback against the plan is about as likely as finding a unicorn in Times Square in a mid-summer afternoon. “It’s a slap in the face to anyone hoping for a crypto handout,” he chuckled.
But wait, there’s more drama! Earlier in the week, Sunil Kavuri, the voice of reason from the largest FTX creditor group, threw some shade at the bankrupt crypto exchange’s reorganization plan. He’s still banging the drum, insisting that the estate should pay using cryptocurrencies instead of cold hard cash. Talk about keeping the crypto dream alive!
Claim buying on the rise
Louis Origny, CTO of claim buyer FTXCreditor, which has bought over 2,100 claims so far, is anticipating that claim buying will increase now that the draft plan has been released.
Origny gave two reasons for this. He noted that the disclosure statement for the bankruptcy plan includes language around an up to 30% tax withholding rate for non-U.S. customers, which could encourage holders to sell their claims on the secondary market instead. Plus, he claimed that not all holders will be able to cash USD checks.
“We expect to have significantly more volume,” he said. “We are bracing for it.”
