FTX and the Internal Revenue Service (IRS) have proposed a settlement that would see the bankrupt entity pay the government nearly one billion dollars. The sum, totalling $885 million, is a far cry from the $24 billion initially demanded by the IRS.
Under the proposed plan, the debtors will pay the IRS $200 million within 60 days of confirmation. The remaining $685 million will be paid ‘to the extent funds are available in accordance with the Agreement’.
This means that the claim is on the lower priority list, and other claims will be paid first.
A hearing on the motion will be held on 25 June before Judge John Dorsey, who oversees bankruptcy proceedings.
FTX debtors had challenged the government tax agency's $24 billion claim last December, warning that FTX - when it was operational - ‘never earned anything close to the amounts that could support the IRS's claims for $24 billion in taxes’.
This figure was in fact halved by the agency itself, which had originally alleged that it owed nearly $44 billion in taxes. The proposed agreement removes another hurdle on FTX's path to closing its bankruptcy.
Later this month, a hearing will be held to cover the entity's proposed plan of reorganisation.
The entity announced in early May that it had raised between $14.5 billion and $16 billion to repay creditors. But the plan has drawn mixed reviews from critics.
Some creditors are unhappy that their claims will only be paid based on November 2022 prices. An aspect of the plan that was challenged earlier this year, although Judge Dorsey said the code is ‘very clear’.
