The FTX bankruptcy estate has scheduled the next distribution to creditors, using funds no longer classified as disputed claims.
The FTX Recovery Trust and debtor FTX Trading on Wednesday announced that the next distribution is expected to start on Sept. 30, and said they will determine eligible claim holders based on a record date of Aug. 15.
The upcoming distribution would mark the third round of repayments to FTX creditors, following a $1.2 billion distribution in February and another $5 billion distribution announced in May.
The announcement on the new repayment comes after the Bankruptcy Court authorized FTX to reduce the disputed claims reserve from $6.5 billion to $4.3 billion, releasing $1.9 billion in cash to be distributed to holders of allowed claims.
Disputed $4.3 billion likely includes China
With $4.3 billion of claims still being disputed, it’s unclear which claims have been approved to be released for distribution.
According to FTX creditor Sunil Kavuri, the upcoming $1.9 billion distribution will “nearly certainly” exclude creditors in China and other countries flagged in a motion on restricted jurisdictions.
“Their claims have not been allowed yet and are unlikely to be allowed by the record date on Aug. 15,” Kavuri told Cointelegraph. “The motion for the procedure regarding restricted jurisdictions is currently being rewritten.”
Additionally, the new round would likely cover some of the claims that have already received partial payments for claims greater than $50,000, Kavuri noted.
No ruling on “restricted jurisdictions” yet
The latest communication from FTX followed a hearing on July 22 that was expected to deliver a ruling on the estate’s motion to freeze payments to 49 jurisdictions due to possible legal breaches with local crypto restrictions.
The motion received wide criticism from creditors, forcing the FTX estate to ask the court for additional time to address at least 90 objections.
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According to court records on Kroll, a US bankruptcy judge has greenlighted the delay by approving FTX’s Motion for Leave on Tuesday.
Although the bankruptcy court has approved the Motion for Leave, the underlying motion related to restricted jurisdictions is yet to receive a formal ruling, according to creditor Weiwei Ji, who told Cointelegraph he joined the July 22 hearing virtually.
Instead of making a formal motion ruling on Tuesday, the court directed the FTX estate to revise it, Ji said, adding that the direction specifically mentioned that they cannot seize creditors’ funds:
“They must provide a much more detailed and workable framework — the motion, as filed, is not feasible. There must be a clear method for creditors to have their jurisdictions reclassified from restricted to non-restricted.”
Cointelegraph approached the FTX estate for comment regarding the latest distribution developments but did not receive a response by publication.
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