Ramazan Eles 
Significant updates have emerged regarding the payments FTX, the cryptocurrency exchange, is set to make to its creditors. Here’s a rundown of the latest developments.
In the ongoing FTX bankruptcy case, a critical development has occurred as the U.S. Trustee raised serious objections to the revised reorganization plan proposed by the exchange.
The Trustee’s filing, submitted alongside objections from a group of creditors, highlights several concerns, including unfair treatment of smaller creditors and improper costs associated with a data breach.
Andrew R. Vara, the U.S. Trustee, emphasized ten key issues with the revised plan, which FTX claims has broad creditor support. One of the most significant points involves a proposal that creditors should bear the costs related to a data breach experienced by Kroll, the claims agent managing creditor requests. Vara argued that the FTX estate should not be responsible for these expenses. “The estate professionals have demanded millions in compensation to address the Kroll data breach… These costs should not be borne by the debtors’ assets,” Vara stated, echoing concerns shared by the bankruptcy fee examiner.
Vara’s filing also criticizes the plan’s distribution scheme, noting that smaller creditors would receive a lower recovery percentage compared to larger ones.
Perhaps the most contentious issue, according to Vara, is the “unacceptably broad” legal protections granted to the administrators managing the bankruptcy, shielding them from potential liabilities. Vara argued that these protections exceed what is legally permissible and go beyond what is typically granted to estate professionals.
FTX’s bankruptcy case is being closely monitored by independent examiner Robert Cleary, whose appointment followed a legal battle that overturned a previous decision barring his involvement.
Another objection to the plan was filed by Sunil Kavuri, representing the largest group of FTX creditors. Kavuri’s filing reiterated concerns about the overly broad legal protections and introduced a new argument for in-kind repayments. He suggested that creditors who lost specific cryptocurrencies, like Bitcoin, should receive those assets back instead of their cash equivalents. This approach could potentially allow creditors to avoid taxable events related to currency conversions.
With the deadline for objections having passed, attention now turns to the confirmation hearing scheduled for October 7th.
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