FTX official: Preferred shareholders are both creditors and victims, and the proposed settlement can speed up the distribution of claims

FTX Official posted on X that FTX creditors are providing the latest progress on the proposed settlement with preferred shareholders. Under the Chapter 11 plan, FTX will return 100% of the assets under its control to creditors. The U.S. Department of Justice controls the distribution of assets confiscated through criminal cases and makes it clear that preferred shareholders are both creditors and victims under criminal law. FTX and preferred shareholders have competing claims for the proceeds of confiscation. While the Department of Justice will decide how to coordinate these claims, if the Department of Justice accepts the settlement, it will resolve these claims in a way that FTX believes is fair to both parties and avoid protracted disputes. In this new settlement, FTX asked the Department of Justice to agree to a centralized distribution through the FTX Chapter 11 plan, speeding up distributions to creditors and avoiding a lot of redundant costs. Note: More information about the U.S. Department of Justice's confiscation process and related assets can be found in the disclosure statement filed on June 27, 2024. Earlier news, under a newly disclosed agreement, FTX debtors will set aside up to $230 million for preferred shareholders from the government seizure process. Because the agreement was finalized after the deadline for FTX creditors to vote on the claims plan and announced 30 days later, it surprised and angered some creditors. In bankruptcy proceedings, creditors are usually repaid before shareholders. Before the voting deadline on August 16, creditors voted overwhelmingly to approve the plan, but they were unaware of this clause.