UNCHAINED: How the Top One-Third of FTX Creditors Are Boosting the Payouts for Everyone Else
May 10, 2024
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Thomas Braziel, managing partner at 117 Partners, discusses the draft FTX bankruptcy plan, which pays out more in dollar terms to creditors but faces criticisms. He explains the complexities of the plan, inter-creditor disputes, and the role of Sullivan and Cromwell. The episode explores why the plan is significant, challenges faced, and criticisms it has received, shedding light on the rapid formation of the plan and logistical challenges of payouts.
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The draft FTX bankruptcy plan is being lauded for paying out more—in dollar terms—to creditors than expected. But it’s at the cost of customers who hold the most valuable assets on the exchange.
Thomas Braziel, managing partner at 117 Partners, dives into the draft FTX bankruptcy plan, which was praised for paying out at more than 100% in dollar terms, but has several intricacies that are drawing criticisms from creditors—including a group that is urging creditors to vote not.
The episode delves into the nuances of the proposed payout, explaining how the estate was able to pay back more than 100% of the dollar value of the claims, why some creditors are being pitted against each other, and why it might get approved even “over the kicking and screaming” of some creditors.
Braziel gives his insights into the rapid formation of this plan, the controversial role of Sullivan and Cromwell, and the logistical challenges posed by what may end up being paper check payouts.
Show highlights:
Why the plan that was filed this week is such big news
How it was never even possible for creditors to be made whole in crypto asset terms
How the majority of depositors had stablecoins on the FTX platform
Why there are “inter-creditor” disputes
What a "cramdown" is and why it's significant in this case
Criticisms of the plan, and why larger investors, especially with crypto holdings, are having their gains socialized
Whether the FTX estate made mistakes by selling some of its positions before they 10x’ed
Why FTX didn't reboot its platform
What conflicts of interest might arise from law firm Sullivan and Cromwell
The tax implications for creditors who are non-US taxpayers
How the claims are going to be distributed
Whether the creditors will favor the proposal and the next steps
Unchained Podcast is Produced by Laura Shin Media, LLC. Distributed by CoinDesk. Senior Producer is Michele Musso and Executive Producer is Jared Schwartz.
