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Moskowitz Law Firm and Boies Schiller Flexner LLP, representing thousands of plaintiffs in the multi-district litigation (MDL) against FTX, have objected to the proposed reorganization plan for <a href="https://coingape.com/tag/ftx/" target="_blank" rel="noopener noreferrer nofollow">FTX</a> Trading Ltd. and its affiliates. They argue that the plan’s recovery figures are misleading and fail to account for cryptocurrency value appreciation since the Petition Date, thereby not meeting Bankruptcy Code 1125’s full disclosure requirements.
<h2 id="legal-objections-to-the-ftx-reorganization-plan-examiner-report">Legal Objections to the FTX Reorganization Plan &amp; Examiner Report</h2>
The objection highlights that the reorganization plan’s promise of a “full recovery” is deceptive. The plan proposes returning 129% of the value of customers’ cryptocurrency accounts as of the Petition Date, when <a href="https://coingape.com/price/bitcoin" target="_blank" rel="noopener noreferrer nofollow">Bitcoin</a> was valued at around $17,000, compared to its current $70,000 value. This means customers would not receive the actual value of their losses. The MDL Plaintiffs argue that the MDL offers a better path for full economic recovery by allowing claims against non-debtor defendants under different legal theories.
<img decoding="async" class="aligncenter size-full wp-image-200822" src="https://coingape.com/wp-content/uploads/2024/06/ftx.jpeg" alt="" width="589" height="680" srcset="https://coingape.com/wp-content/uploads/2024/06/ftx.jpeg 589w, https://coingape.com/wp-content/uploads/2024/06/ftx-260x300.jpeg 260w, https://coingape.com/wp-content/uploads/2024/06/ftx-150x173.jpeg 150w" sizes="(max-width: 589px) 100vw, 589px">
The Anti-Double-Dip Provision in the plan implies that any recovery from the MDL would duplicate the recovery from the reorganization plan, which the MDL Plaintiffs dispute. They argue that claims in the MDL are against non-debtor entities for different legal violations, and thus do not duplicate recoveries under the plan. The objection calls for the Disclosure Statement to clarify this and disclose whether the provision precludes further recoveries.
The MDL Plaintiffs criticize the debtors for not including the findings of Robert J. Cleary’s Examiner Report in the Disclosure Statement. The report identifies potential causes of action and unresolved issues that creditors need to understand. The objection demands transparency about how these findings impact the reorganization plan.
<img decoding="async" class="aligncenter size-full wp-image-200824" src="https://coingape.com/wp-content/uploads/2024/06/ftx2.jpeg" alt="" width="514" height="680" srcset="https://coingape.com/wp-content/uploads/2024/06/ftx2.jpeg 514w, https://coingape.com/wp-content/uploads/2024/06/ftx2-227x300.jpeg 227w, https://coingape.com/wp-content/uploads/2024/06/ftx2-150x198.jpeg 150w" sizes="(max-width: 514px) 100vw, 514px">
The objection points out a contradiction between the debtors’ stance and the findings in <a href="https://coingape.com/trending/sam-bankman-fried-fraud-case-everything-you-need-to-know/" target="_blank" rel="noopener noreferrer nofollow">Sam Bankman-Fried’s (SBF) criminal case</a>. The jury found that SBF misappropriated customer funds, opposing the debtors’ position. The Disclosure Statement must address this contradiction and inform customers that their funds were misappropriated, impacting their recovery.
Also Read: <a href="https://coingape.com/bitcoin-analyst-who-predicted-btc-hit-350k-betting-these-two-cryptos-now/" target="_blank" rel="noopener noreferrer nofollow">Analyst Who Predicted BTC To Hit $350K Is Betting On These Two Cryptos Now</a>
<h2 id="concerns-over-creditor-representation-and-good-faith">Concerns Over Creditor Representation and Good Faith</h2>
The plan proposes a Consolidated Wind Down Trust without creditor representation on the Wind Down Board, which includes only the Plan Administrator and joint official liquidators from the Bahamas. The MDL Plaintiffs argue this undermines creditor interests and questions the plan’s good faith under Bankruptcy Code 1129.
Finally, the involvement of Sullivan and Cromwell, a defendant in the MDL, in drafting the plan raises potential conflicts of interest. The objection calls for revisions to protect creditor interests and ensure the plan complies with fairness and transparency standards.
Also Read: <a href="https://coingape.com/fidelity-bitcoin-etf-fbtc-sees-0-5-billion-inflows-in-two-days-hits-key-milestone/" target="_blank" rel="noopener noreferrer nofollow">Fidelity Bitcoin ETF FBTC Sees $0.5 Billion Inflows In Two Days, Hits Key Milestone</a>
The post <a href="https://coingape.com/ftx-class-action-lawyers-file-objection-to-ftx-reorganization-plan/" rel="noopener noreferrer nofollow">FTX Class Action Lawyers File Objection to FTX Reorganization Plan</a> appeared first on <a href="https://coingape.com" rel="noopener noreferrer nofollow">CoinGape</a>.

FTX Class Action Lawyers File Objection to FTX Reorganization Plan

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