Thomas Braziel, managing partner at 117 Partners, shares his expertise on the intricate FTX bankruptcy plan. He explains how the estate's strategy could lead to payouts exceeding 100% in dollar terms, despite the emotional divide among creditors. Braziel discusses inter-creditor disputes and the controversial 'cramdown' concept, all while highlighting the challenges and criticisms surrounding the plan. He dives into how many depositors lost stablecoins and what this means for the complex recovery narrative in the cryptocurrency landscape.
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insights INSIGHT
FTX Repayment Nuances
FTX's bankruptcy plan aims to repay creditors over 100% of their dollar value claims, but not in crypto value.
Many creditors had stablecoins, so they are made whole, while those holding appreciating crypto feel shortchanged.
insights INSIGHT
How FTX Achieved High Payouts
FTX estate achieved high payouts through asset sales, including Solana's price increase, and recovering funds via legal action.
Two-thirds of FTX depositors held stablecoins, minimizing losses for the majority.
insights INSIGHT
Inter-Creditor Disputes
Creditors with large crypto holdings argue their gains are being socialized to benefit others.
Dollarization of claims, while standard procedure, fuels this discontent among certain creditors.
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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 a number of 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% than 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 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 actually 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 