FTX has amassed billions of dollars more than it needs to cover what customers lost in its November 2022 collapse, setting them up to receive full recoveries.
Lower-ranking creditors typically receive only a fraction of their holdings in bankruptcies, but FTX benefited from a strong rally in cryptocurrencies, including Solana, a token heavily supported by FTX founder Sam Bankman-Fried, who has been convicted of fraud. The company has also sold various assets, such as a stake in the artificial intelligence company Anthropic.
"This is just an unbelievable result in any bankruptcy," said FTX Chief Executive Officer John Ray, who took over the firm when it collapsed.
Prices for FTX claims rose to 101 cents on the dollar from 95 cents last week, according to Cherokee Acquisition.
Once it completes the sale of all its assets, FTX will have about $16.3 billion in cash to distribute, according to a company statement. It owes more than $11 billion to over 2 million customers and other non-governmental creditors.
The latest numbers highlight the surprising outcome for FTX, whose collapse was likened to Enron Corp.'s fraud-driven downfall and Bernie Madoff's Ponzi scheme unraveling. Earlier this year, the company had about $6.4 billion in cash.
There have been only a few large US corporate bankruptcies in recent years where creditors received full repayment. In 2021, car rental company Hertz emerged from bankruptcy with money left to repay shareholders, thanks to a surge in used car prices. In 2013, American Airlines Group Inc.'s parent company also exited bankruptcy, providing distributions to shareholders and fully repaying unsecured creditors.
Although all debts will be paid in full, along with interest, there will be nothing left for equity holders, according to court documents filed in federal court in Wilmington, Delaware, where the FTX case is being handled. In bankruptcy, company owners cannot collect anything until all debts are fully repaid. In this case, claims from US regulators and the Internal Revenue Service are significant enough to likely wipe out shareholders.
