FTX Recon Team Criticizes Traders and Market Makers in FTX Unsecured Creditors Seeking Control over Assets

Odaily News: FTX's management team criticized traders and market makers in FTX's unsecured creditors, accusing them of seeking control of assets without regard for the impact on other stakeholders. Recently, the FTX management team proposed a restructuring plan draft. The Official Committee of Unsecured Creditors claims that the company lacks negotiation and states that FTX is missing out on opportunities to generate better returns for its significant cash and token holdings. In a rebuttal filed on Wednesday, lawyers representing FTX's management stated that extensive discussions took place between the representatives of both parties. The opposition stance of the creditor group "suggests a bias towards adopting a non-representative plan that would hand over control of the debtor's billions of dollars in liquid assets to unrestricted crypto traders and market makers." According to reports, the Official Committee of Unsecured Creditors is urging FTX to invest a portion of its approximately $2.6 billion cash reserves in short-term government bonds to generate additional net income, claiming that it would help offset professional fees as high as $33 million incurred in the previous eight months (Bloomberg). Previously reported, FTX's current CEO, John J. Ray III, stated that the team submitted a restructuring plan early in the bankruptcy process to solicit feedback from creditors. FTX hopes to collaborate with creditors to modify the plan in the third quarter of 2023 and submit a disclosure statement in the fourth quarter. The proposed FTX restructuring plan indicates that, in addition to establishing an offshore exchange company, FTX is also considering setting up a new trust company called "FTX Ventures Trust." This trust would hold FTX's investments in private startups and digital tokens that FTX does not intend to sell immediately after emerging from bankruptcy. The purpose of this trust is to manage these long-term investments and distribute cash over time. FTX has not yet decided whether this trust will be owned by FTX's bankruptcy estate or traded separately after the bankruptcy. The goal is to find a way to maximize the value of these illiquid investments, which are not easily sold by FTX's management post-bankruptcy.