FTX: $24 billion in IRS claims threatening to halt case’s progress

By Sarah Lizee

Olympia, Wash., Nov. 30 – FTX Trading Ltd. said the Internal Revenue Service’s $24 billion in claims against it are threatening to halt the progress made in its Chapter 11 case, according to a claims estimation motion filed Wednesday with the U.S. Bankruptcy Court for the District of Delaware.

“Notwithstanding the facts of the debtors’ Chapter 11 cases, the claims asserted by the IRS threaten to halt the debtors’ progress and any distribution to customers and other creditors indefinitely on the basis of estimates the IRS has not explained after many months of discussion and increasingly urgent requests,” FTX said in the motion.

FTX said a prompt claims estimation is necessary to prevent undue delay in confirming a plan and distributing value to customers and non-customer creditors.

“The IRS claims filed to date nominally total approximately $24 billion – more than fifty times what the debtors ever earned, hundreds of times more than what could plausibly be owed by the debtors, and several times greater than the total distributable value that is currently available to creditors,” FTX said.

“These unsubstantiated ‘placeholder’ claims grossly speculate as to the debtors’ theoretical prepetition tax liabilities and bear no relation to reality.”

FTX said it has sought specificity from the IRS on the legal bases that might support the claims, but little progress has been made.

The debtor said the IRS potentially could spend years investigating in an attempt to liquidate its claims, after which there would be litigation if the debtors disagree with the IRS’ conclusions.

FTX has asked the court to establish a schedule and procedures for estimating the IRS claims at zero, or another amount to be determined at trial.

Section 505(a) of the bankruptcy code permits the court to determine prepetition tax liabilities, and section 502 of the bankruptcy code mandates estimation be invoked to do so where the asserted claims are unliquidated and fixing their value would unduly delay the administration of the Chapter 11 cases, FTX said.

FTX has headquarters in the Bahamas and filed Chapter 11 bankruptcy on Nov. 11, 2022 under case number 22-11068.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.