FTX Resolves IRS Tax Claim with $885 Million Settlement
The IRS will also be granted a $685 million claim, payable on a lower priority basis, ensuring that FTX's customers and creditors are addressed first
Following the recent CNF update on FTX's bold initiative ensuring 98% of creditors receive 118% of their claims in cash, FTX has taken a decisive step by settling a substantial $24 billion tax claim with the IRS for $885 million. This resolution was outlined in a recent filing in the US Bankruptcy Court for the District of Delaware, marking a critical step in FTX's bankruptcy proceedings.
According to this agreement, the IRS will receive a $200 million priority claim, due within 60 days after FTX's restructuring plan is activated.
Structuring the Settlement
As further detailed in a recent CNF update and supported by a CNF YouTube video, FTX's approach to handling its IRS obligations involves not only a straightforward payout but also prioritizing customer and creditor reimbursements.
The IRS will also be granted a $685 million claim, payable on a lower priority basis, ensuring that FTX's customers and creditors are addressed first. This setup aims to prevent potential delays that could impede the expedited repayment of FTX customers, aligning with the company's objectives to resolve its financial obligations swiftly and effectively.
According to Bloomberg Law's edition on June 4, 2024, on the FTX settlement of a $24 billion tax claim with the IRS in bankruptcy court, significant developments have emerged.
FTX has resolved its considerable dispute with the Internal Revenue Service by agreeing to a settlement that involves paying only a fraction of the $24 billion initially claimed by the IRS.
This agreement marks a pivotal advancement in FTX's ongoing bankruptcy proceedings, offering a pathway to substantial payments to aggrieved customers. Key information from the settlement includes:
The IRS will receive a $200 million priority claim, which is scheduled to be paid within 60 days following the approval of FTX's restructuring plan.
A larger sum of $685 million will be treated as a lower-priority claim. This amount is payable to the IRS only after all customer and other creditor claims have been satisfied, and only if sufficient funds remain.
The agreement effectively eliminates the risk of prolonged and uncertain litigation between FTX and the IRS, thereby facilitating quicker resolutions to the bankruptcy case and hastening the distribution of assets to FTX's customers and creditors.
This settlement not only prevents potential delays in reimbursing FTX's customers but also ensures that the IRS will still receive a significant portion of the claims, albeit prioritized after customer repayments.
