FTX $900M Payout Triggers 6-Month Onboarding Deadline for Creditors

Woofun AI reports that the fifth distribution under FTX’s Chapter 11 plan launches on Friday, July 31, targeting holders of allowed Convenience and Non-Convenience claims who satisfied the June 16 record-date and pre-distribution mandates. This payout mechanism distinguishes between claim allowance and payment readiness, meaning a claim can be legally allowed even if the holder failed to submit a valid tax form, complete provider onboarding, or pass sanctions screening by the critical June 16 deadline. Consequently, missing any of these eligibility gates results in the exclusion from the July 31 payment entirely.

The deeper driver of potential loss lies in the post-payment compliance window. For allowed claim holders whose provider onboarding remains incomplete, the July 31 date initiates a strict six-month window to finalize setup.

Woofun AI data shows that failure to complete this onboarding within the six-month period may result in the forfeiture of distribution rights on the allowed claim.

Additionally, tax forms operate under a separate timeline governed by Section 7.14 of the Plan; per the FAQ, failing to submit a valid tax form within the Plan’s specified timeframe also triggers forfeiture of the distribution.

Structurally, the Plan waterfall allocates distinct fifth-round payments across creditor classes, leading to varied cumulative recovery rates. Allowed Class 5A Dotcom Customer Entitlement Claims receive an incremental 9% payment, pushing their cumulative distribution to 105%, while Class 5B U.S. Customer Entitlement Claims receive a 5% payment to reach the same 105% cumulative total. Classes 6A General Unsecured Claims and 6B Digital Asset Loan Claims are each slated for a 3% payment, bringing both to 103% cumulatively. FTX lists Class 7 Convenience Claims at a 120% cumulative distribution, noting that actual class percentages may vary slightly due to rounding.

The approximately $900 million figure applies exclusively to the Chapter 11 creditor distribution, leaving other processes unaffected. The preferred-equity payment and the Bahamas process continue under their distinct terms, independent of this onboarding provision. This separation ensures that the six-month onboarding rule governs only allowed claim holders with incomplete provider setups, marking a clear boundary between creditor classes and jurisdictional proceedings.