The bankrupt exchange has backtracked on a procedure that could have resulted in the loss of creditor claims in 49 jurisdictions.
FTX has withdrawn its motion aimed at implementing a procedure for “restricted jurisdictions,” which could have led to the loss of creditor rights in certain countries.
The proposal, included in the Chapter 11 restructuring plan, required court approval to establish a “Restricted Jurisdiction Procedure” designed to assess regulatory compliance in 49 countries where refunds might be problematic due to local regulations.
Affected jurisdictions included China, Russia, Ukraine, Pakistan, and Saudi Arabia, with total claims of around $800 million, representing roughly 5% of the $16 billion estimated in potential distributions. China alone accounted for 82% of this amount.
Under FTX’s original plan, the exchange would have engaged local legal advisors in each jurisdiction to evaluate the feasibility of regulatory-compliant payments. If a compliant process was deemed impossible, the jurisdiction would have been designated as restricted after a 45-day objection period, and claims in unresolved jurisdictions would have been forfeited and returned to the trust for redistribution.
Opposition from Chinese creditors
The motion faced strong opposition from creditors, particularly a group of over 300 Chinese claimants represented by Weiwei Ji, who filed an objection in the Delaware court. Ji, a tax resident in Singapore but considered Chinese due to his passport, argued that the proposal lacked factual or legal basis to designate China as a restricted jurisdiction.
The motion was withdrawn on November 3 “without prejudice”, meaning the trust could resubmit the request in the future with proper notice under applicable rules.
