The FTX exchange and the Internal Revenue Service (IRS) have negotiated a deal in which the insolvent exchange would make a payment of $885 million, far lower than the original demand of $24 billion made by the IRS. As per the agreement, FTX debtors are obligated to remit $200 million to the IRS within 60 days of approval.
The remaining $685 million will be paid dependent on the availability of cash, with a lower priority status. A hearing about this move is scheduled for June 25th, presided over by Judge John Dorsey, who has jurisdiction over the bankruptcy proceedings.
The resolution of FTX’s bankruptcy has taken a huge stride with the settlement, as the IRS claim, which was originally one of the highest, has been substantially decreased. This reduction allows FTX to proceed with its reorganization.
The settlement determines the payment arrangement for creditors, with the IRS getting an initial payment of $200 million and the remaining $685 million being allocated to higher priority claims before being handled.
The decrease from $24 billion to $885 million is substantial, since it might have greatly restricted financing for other creditors.
With the June 25 hearing approaching, interested parties will carefully monitor the proceedings. The hearing will cover the IRS settlement and the comprehensive reorganization plan put up by the FTX estate.
This plan will outline the distribution of the amassed $14.5 billion to $16 billion. Although the restructuring plan demonstrates advancement, it is subject to criticism, particularly with the determination of the valuation date for creditor claims.
FTX also announced it is liquidating assets to reimburse clients, including selling its remaining interests in Anthropic, an artificial intelligence firm. Over 15 million shares were sold at $30 per share, generating over $452 million in revenue. Venture capital company G Squared purchased one-third of the shares for $135 million, while Fund FG-BLU, hedge funds, and financial organizations also purchased shares.
