FTX plan forecast 118% cash recovery for 98% of creditors by number

A recovery plan built around cash

On May 7, 2024, FTX Trading Ltd. and affiliated debtors filed an amended Chapter 11 plan and disclosure statement in the U.S. Bankruptcy Court for the District of Delaware. The estate projected $14.5 billion to $16.3 billion of net distributable proceeds against about $11.2 billion of estimated allowed claims in the principal secured, customer, convenience, general-unsecured and digital-asset-loan classes.

The proposal was the clearest indication by that date that the failed exchange’s bankruptcy could produce full dollar recoveries for non-governmental creditors. FTX said a special convenience class for allowed claims of $50,000 or less would cover 98% of creditors by number. If the court approved the plan, those creditors were forecast to receive approximately 118% of their allowed claims in cash, generally within 60 days after the plan became effective and subject to claim allowance, identity checks and distribution requirements.

Those percentages were forecasts in a debtor-authored proposal, not money already recovered by customers. The plan still required a disclosure process, creditor voting and court confirmation.

What “118%” meant

The percentage did not mean that customers would receive 118% of the cryptocurrency quantities once shown in their FTX accounts. The plan allocated recoveries from the dollar value of claims at the November 11, 2022 bankruptcy petition date. A separate court-approved conversion table supplied estimated petition-date values for digital assets used in voting and distribution calculations.

For the Dotcom and U.S. convenience classes, the May 7 plan specified cash equal to 100% of an allowed claim plus post-petition interest at the plan’s “Consensus Rate” through the initial distribution date. FTX’s accompanying statement described rates of up to 9% for primary customer and creditor classes. The advertised 118% was therefore an approximate result of principal plus proposed interest, not a restoration of the later market value of lost tokens.

That distinction was economically central. A claimant could be made whole relative to a court-recognized dollar claim while still receiving materially less than the value that the same number of coins might command at distribution. This reconstruction makes no calculation of that opportunity cost because crypto prices vary by venue and timestamp, and the May 7 filings did not establish one universal comparison portfolio.

How the estate reached its forecast

The disclosure statement’s estimate used information available through March 31, 2024. It reported about $8.4 billion of cash on hand at that date and forecast roughly $12.8 billion by an assumed September 30, 2024 effective date, including expected asset monetizations. It projected another $2.1 billion to $3.9 billion from assets monetized after that assumed date.

FTX attributed the recovery to sales and anticipated sales of digital assets, more than 200 venture equity positions, fund and loan investments, subsidiary value, litigation claims and other recoveries. That mix matters: the projected estate was not simply a pool of customer bitcoin and ether that had risen in value. The debtors’ statement said the exchange had held only a small fraction of the bitcoin and ether customers believed it held when Chapter 11 began.

Why the filing mattered

The plan converted a sprawling cross-border insolvency into a concrete proposed waterfall. It also relied on settlements or proposed settlements involving customer groups, Bahamian liquidators and U.S. authorities, including subordination arrangements intended to preserve value for non-governmental creditors.

For the crypto industry, the institutional lesson on May 7 was sharper than the “full recovery” headline. Bankruptcy law translated volatile token balances into petition-date claims, while centralized custody failure left customers exposed to a lengthy legal distribution process. The unexpectedly strong cash forecast showed the value of recoveries and asset monetization, but it did not erase the difference between owning an asset and holding a bankruptcy claim against an intermediary.

What remained unresolved on May 7

No creditor vote, confirmation order or initial distribution had occurred. The projected range depended on claim reconciliation, future sale proceeds, litigation recoveries, wind-down costs, governmental settlements and the timing of effectiveness. The filing itself warned that implementation was subject to material risks. The verified event for May 7, 2024, is therefore the filing of the proposal and its stated forecasts—not approval or payment.