Americas Restructuring: FTX’s US$15bn restructuring
Recovering in style
FTX, once among the top cryptocurrency exchanges and valued at more than US$32bn, collapsed in spectacular fashion in 2022 after it was discovered that its founder, Sam Bankman-Fried, misappropriated some US$10bn of customer funds.
In the immediate aftermath of the exchange’s failure, customers, creditors and counterparties were facing a total wipeout. Some bankruptcy claims against FTX traded for as little as five cents on the dollar as conflicts raged between factions.
By 2025, when FTX emerged from bankruptcy protection with plans to wind down, advisers to the company and its creditor groups recovered assets and hammered out agreements that would make most creditors whole. The value of creditor claims has soared above US$1.40 on the dollar.
Perella Weinberg advised FTX, Rothschild advised the executive committee of the ad hoc committee of non-US customers of FTX.com and Jefferies advised the official creditors committee.
“The recoveries are astounding,” said one adviser. “150% recoveries represent an amalgamation of different assets that had to be identified, located and monetised.”
While cryptocurrencies took a major hit as FTX collapsed, values rebounded during the course of the bankruptcy, especially bitcoin, which rose to US$94,334 in November 2024 from US$15,782 when FTX filed. That rise certainly helped recoveries but that doesn’t negate the skill involved in boosting recoveries.
The recovery was near unprecedented in light of FTX’s lack of reliable financial reporting, accounting or governance systems, advisers said.
In all, lawyers and advisers were able to recover US$14.7bn, untangling a global infrastructure of billions in digital assets, more than 200 equity investments and partnership interests, derivatives, and dozens of fund loans and other investments.
The case required multiple complex settlements with competing creditor and customer groups, including the Internal Revenue Service in the US, the Commodity Futures Trading Commission, the US Department of Justice, numerous US states and foreign governments, and seven other insolvency proceedings around world.
It involved dozens of governmental investigations, hundreds of transactions and litigation disputes, and millions of international creditor claims.
Advisers have singled out the entrance of the ad hoc committee as a turning point in the case.
That group, which comprised 65 members with US$6bn in claims, was advised by Rothschild and led by Charles Delo.
“It was a building block process,” Delo said. “We’d structure a customer settlement with the debtor, negotiate for assets seized by the DOJ, try to settle competing bankruptcy processes,” he said. “You get one done and you move onto the next phase.”
One of the most contentious aspects of the bankruptcy case remains a sore point for many FTX customers. The value of their claims was set at the point FTX filed for bankruptcy, which could have been significantly less than the value of assets customers held with FTX.
“That was the biggest tensions in the case,” Delo said. “People wanting their property back but not being able to get it.”
The FTX estate argued that once the assets were deposited onto FTX, they became property of the estate, and thus, customers are unsecured creditors who must share in the overall recovery alongside other creditors.
Ultimately, customer property dispute was consensually resolved with a plan support agreement that Rothschild helped negotiate, allowing priority treatment to customer claims over other general unsecured creditors.