This is when FTX’s court-approved Chapter 11 plan will go into effect

FTX and its affiliated debtors have announced that their Chapter 11 plan of reorganization will officially become effective on January 3, 2025.

This day has also been designated as the initial distribution record date for those with allowable claims in the plan’s convenience classes.

Distribution details

According to a news release, payments for these claims are expected to begin within 60 days of the plan’s effective date. Accordingly, recipients must complete Know Your Customer (KYC) procedures and meet other distribution requirements, including submitting tax forms.

This first round of payments will only apply to convenience classes, with FTX noting that separate registrations and payment dates for other claim classes will be announced at a later date.

The court-approved reorganization plan, completed in October 2024, received overwhelming support from creditors, who can recover an average of 119% of the value of their claims. In addition, under the terms of the initiative, some will receive up to 140% in cash.

FTX estimates that total recoveries will range from $14.7 billion to $16.5 billion. These refunds have been made possible by asset recovery efforts by various parties, including the US Department of Justice and international regulators.

The company’s CEO, John J. Ray III, emphasized that the latest development demonstrated the significant success of recovery efforts.

“Over the past two years, our team of professionals has worked meticulously and efficiently to recover billions of dollars to get to this point.”

He added that FTX is now in a strong position to begin repaying funds to customers and creditors. He also encouraged claim holders to ensure that they follow all the necessary steps to avoid delays in receiving their payments.

Distribution agents and FTX convictions

To support the distribution process, the defunct exchange has partnered with two crypto custodians, BitGo and Kraken. The duo will help disburse the funds to both retail and institutional clients as well as other claimants in eligible jurisdictions.

FTX’s bankruptcy filing at the end of 2022 was one of the most significant collapses in the crypto industry. It was marked by several high-profile convictions, including the November 2023 conviction of former CEO Sam Bankman-Fried on fraud and conspiracy charges, which resulted in a 25-year prison sentence.

In May 2024, Ryan Salame, co-CEO of FTX Digital Markets, was sentenced to 7.5 years in prison, while Caroline Ellison, the former head of Alameda Research, received a two-year prison sentence . Two other executives, Nishad Singh and Gary Wang, avoided prison altogether.

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