Distressed Investors Accumulate $1.3B Position in FTX Group Claims; Asking Prices Reach 95%

Confidence in FTX Group’s ability to repay creditors has recently increased substantially as the debtors move forward with their goal to confirm a bankruptcy plan this year. As disclosed during a Jan. 31 hearing, the FTX Group debtors anticipate that third-party customers and general unsecured creditors would be paid 100% over time, “measured at petition time value” and subject to reaching an agreement with governmental creditors to voluntarily subordinate their “very large and impaired claims.”

However, in the debtors’ most recent and “final” request to extend their exclusive periods to file and solicit a plan, the debtors caution that the full payment of these creditor groups is “an objective and not a guarantee,” with a “daunting amount of work” required to be done.

Cherokee Acquisition notes that the FTX claims market has experienced a substantial accumulation of claims by distressed-debt trading firms, with the top six holders amassing an approximately $1.3 billion position. According to Cherokee’s Claims Market data, Attestor holds approximately $412.7 million, Farallon Capital Management holds $297 million, Canyon Partners holds $246.6 million, The Baupost Group holds $182 million, Oaktree Capital Management holds $130.7 million, and Silver Point Capital holds $85.2 million.
 
Based on Cherokee’s Claims Market data, the bulk of these positions were acquired over the past several months, as shown in the chart below:
 
According to data from Claims Market, trading prices for claims in the FTX Group bankruptcy cases are converging with the debtors’ goal of full payment, with bids quoted at 90% and asking prices quoted at 95% as of the beginning of March. The historical pricing of FTX claims on Claims Market is shown below:
 
In March 2023, when FTX claims were trading below 25%, Reorg estimated that claims could be valued substantially higher, with a midpoint of up to 66% and up to 94% in an optimistic scenario.