FTX Creditors to Receive $5 Billion in May 30 Payout

FTX Recovery Trust has announced that it will commence the distribution of over $5 billion to creditors on May 30, as part of the company’s Chapter 11 Plan of Reorganization. This distribution is the second official payment round since FTX entered bankruptcy proceedings and will be disbursed to holders of allowed claims in both Convenience and Non-Convenience Classes who have completed the necessary pre-distribution steps.

The funds will be distributed to eligible claimants through designated Distribution Service Providers, BitGo and Kraken, within one to three business days of the release date. John J. Ray III, the FTX Recovery Trust Plan Administrator, highlighted that this distribution marks a significant step in executing one of the most complex creditor payment operations to date, given the extensive creditor base.

Ray III also noted that the first non-convenience class distributions are “an important milestone for FTX,” crediting the professional recovery teams for their efforts in navigating the large-scale coordination. The May 30 payouts follow an earlier round of distributions that began in February for smaller creditors. Under that initial phase, claimants with approved amounts under $50,000 began receiving full reimbursements and 9% annual interest accrued since the bankruptcy filing in November 2022.

Customers who have onboarded with either BitGo or Kraken as their selected provider will receive their payments directly from these platforms. By onboarding, customers waived their right to receive direct cash distributions from FTX and instructed the firm to remit funds to their chosen provider. The Trust will disclose future payment dates as the process continues.

According to the terms outlined in the reorganization plan’s payment hierarchy, Class 5A Dotcom Customer Entitlement Claims will receive a 72% payout, while US-based Class 5B Customer Entitlement Claims will receive 54%. Class 6A General Unsecured Claims and Class 6B Digital Asset Loan Claims will receive 61%. Class 7 Convenience Claims, which typically cover smaller claims, will be paid out at 120%.

While the first wave fully repaid small creditors, those with claims above $50,000 are scheduled to receive distributions through upcoming rounds. A total of $16 billion has been allocated for repayments. Some creditors have expressed frustration with the wait, though bankruptcy filings indicate that the estate recovered more than initially projected, enabling broader and deeper repayment efforts than originally anticipated.