⚡ Legal Battles Intensify Over FTX Reorganization Efforts
posted 7 Jun 2024
A group of FTX creditors, led by Sunil Kavuri, has officially opposed the company's reorganization plan. They presented multiple arguments against the plan, highlighting issues such as the taxation of returned assets, disregard for property rights, and a misalignment with client interests.
The objection includes an independent expert report and several additional points. One key point is the demand for assets to be compensated at their current market value rather than at the value during the time of bankruptcy. This document is a culmination of ongoing disputes between clients, institutional creditors, and FTX's current management.
In a related move, this group of creditors is also suing the law firm Sullivan & Cromwell, which advised FTX prior to its bankruptcy and is now involved in drafting the reorganization plan. Clients argue that the firm knew about the fraud well before the collapse of the platform and is now deliberately prolonging the recovery process to benefit from increased fees.
Previous independent investigations concluded that Sullivan & Cromwell was not aware of the fraud. However, the firm still faced criticism for making controversial statements. Meanwhile, FTX's management has negotiated a deal with the U.S. Internal Revenue Service (IRS) to pay a $200 million higher priority claim and a $685 million lower priority claim, significantly less than the $24 billion initially discussed.
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