Bankrupt crypto exchange, FTX, and its debtors have suggested reducing the maximum settled value for "small estate claims" from $10 million to $7 million. The change followed opposition by the US Trustee to the settlement proposal previously put forward by the exchange.
FTX Adjusts Terms for Small Estate Claims
The FTX and its debtors in a court document filed yesterday (Sunday) noted that the US Trustee, which is the office in the US Department of Justice that oversees the administration of bankruptcy cases, criticized the move. They argued that the objection should be overruled and the motion granted.
“The US Trustee—the sole objector to the Motion—seeks to inject itself into a routine settlement process that is already adequately safeguarded by two different creditor committees,” the crypto exchange explained.
FTX further explained: "The establishment of omnibus settlement procedures in complex cases is routine, appropriate, and authorized. Indeed, contrary to the suggestion of the US Trustee, courts often permit the settlement of claims by category and authorize relief similar to that sought by the Debtors here.
"The Debtors submit that the proposed Settlement Procedures would allow for quick, efficient, and cost-effective resolutions of large volumes of Small Estate Claims. These streamlined settlements would maximize recovery for all creditors in these Chapter 11 Cases, and minimize the burden placed on the Court in resolving potentially thousands of individual Bankruptcy Rule 9019 motions."
In addition to the proposed adjustment to the maximum settled value of the "small estate claims", FTX and its debtors, in a bid to address the issues raised by the US Trustee in its objection, have proposed filing monthly reports of executed settlements. They also want to include the US Trustee as a third “noticed party” in the arrangement.
Meanwhile, Finance Magnates reported that FTX has reached a settlement agreement in its legal dispute with Genesis, another bankrupt digital asset lender. FTX will accept a $175 million payment directed to Alameda Research, its affiliated crypto hedge fund which is also facing insolvency.
The settlement is a big compromise for FTX. Earlier in May, the crypto exchange had petitioned to recoup nearly $4 billion in purported transfers made to Genesis between August 13 and November 11 of 2022.
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This article was written by Solomon Oladipupo at www.financemagnates.com.
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