FTX’s Chapter 11 bankruptcy plan runs into problems at the U.S. Trustee’s Office, which listed 10 objections Friday. These include excessive releases and failure to exclude an important Kroll data breach. The Office says that the plan should not be confirmed, as it funds FTX’s full discharge and releases a broad array of individuals connected with the estate. This contradicts recent U.S. Supreme Court cases, such as Purdue Pharma, on receiverships and nonconsensual third-party releases.
The plan is also objected to by the U.S. Trustee for allowing FTX to change terms without creditor approval until after voting begins. The supplement took effect, in calculating votes, and it is open to later alteration that could prejudice creditors as the filing notes.
Another point of concern is the plan’s requirement that parties must opt in order to be notified by the trustee about future developments. This provision could mean that those affected will be left entirely in the dark as to how matters develop in future, at their expense possibly.
