FTX repayments are set to begin on February 18, 2025, for creditors in the convenience class, specifically those with claims under $50,000. This schedule has been communicated by the FTX Recovery Trust, with expectations that around $1.2 billion will be distributed to these smaller claim holders. The FTX Recovery Trust was established as part of the bankruptcy proceedings for FTX, the once-prominent cryptocurrency exchange that collapsed in 2022.

FTX filed for Chapter 11 bankruptcy in November 2022. The collapse was triggered by a massive withdrawal of funds by customers following reports that FTX’s sister company, Alameda Research, held a large amount of FTT, FTX’s own cryptocurrency token. This led to a liquidity crisis, revealing an $8 billion shortfall in FTX’s accounts. Sam Bankman-Fried resigned as CEO of FTX and was replaced by John J. Ray III, known for his role in the Enron bankruptcy, to oversee the company’s restructuring.

Multiple investigations ensued, with Bankman-Fried later being convicted of fraud and sentenced to 25 years in prison for defrauding FTX customers out of billions. Other executives, like Caroline Ellison and Gary Wang, pleaded guilty to related charges. The FTX estate managed to recover assets amounting to between $14.7 billion and $16.5 billion through various means, including selling off investments and recovering crypto assets.

The Trust was set up to manage and distribute the assets recovered from FTX’s bankruptcy estate to its creditors and customers. According to various reports, the Trust aims to repay creditors, focusing initially on those with claims of $50,000 or less. The plan involves distributing recoveries from the sale of assets, including investments in tech companies and cryptocurrencies, as well as from litigation claims.

Distributions were anticipated to begin in early 2025, with specific dates mentioned for the convenience class (claims under $50,000) distributions set for February 18, 2025. The Trust has managed to recover between $14.7 billion and $16.5 billion, which is intended to be used for repayments. Creditors with claims of $50,000 or less were expected to receive about 118% of their claim value, based on the cryptocurrency prices at the time of FTX’s bankruptcy in November 2022, not current market values.

A bankruptcy plan was approved in late 2024, allowing for the repayment of creditors. The plan aimed to repay customers 118% of their claim value based on the crypto prices on the date of bankruptcy filing, not current market values, which has been a point of contention among creditors, there was a notable amount of customer funds, reported between $1 billion to $2 billion, that could not be accounted for initially.

One significant issue highlighted in discussions around the repayment plan is the discrepancy between the value of cryptocurrency at the time of bankruptcy versus its current value. Creditors are receiving payments based on lower 2022 prices, which has been a point of contention. The Trust has been using various channels to inform creditors about the progress and requirements for receiving distributions, including official statements.

The method of repayment, especially the “dollarization” of claims, where crypto holdings are converted to their dollar value at the time of bankruptcy, has been criticized by some creditors given the rise in crypto values post-bankruptcy.

Please note, while there is considerable excitement and anticipation around this news, the exact details and the process might still be subject to change or clarification as the date approaches. It’s advisable to keep an eye on official communications from the FTX Recovery Trust for the most accurate and up-to-date information.

In a long-awaited move, a consortium of banks led by Morgan Stanley has successfully offloaded $5.5 billion of the $13 billion debt package used to finance Elon Musk’s $44 billion acquisition of Twitter, now rebranded as X.

The sale marks the second attempt by the banks—which include Bank of America, Barclays, Mitsubishi UFJ, BNP Paribas, Mizuho, and Société Générale—to find buyers for the risky loans, following an earlier failed attempt in 2022.

The original financing structure of the deal included a $6.5 billion secured term loan, a $3 billion unsecured loan, another $3 billion in secured loans, and a $500 million revolving credit facility. Typically, banks offload such loans quickly to minimize exposure. However, Musk’s sweeping changes to the platform—including mass layoffs, major shifts in content moderation policies, and the loss of key advertisers—spooked potential buyers, leaving the banks stuck holding the debt for nearly two years.

The first attempt to sell the unsecured portion of the loan in late 2022 ended disastrously. Investors offered to buy in at just 60 cents on the dollar, a steep discount that would have forced the banks to take billions in losses. Rather than accept such a poor valuation, the banks chose to hold onto the debt, betting that market conditions might improve.

A Stronger Deal, But Still a High-Risk Investment

Unlike the previous attempt, this time the banks successfully sold down part of the debt at 97 cents on the dollar, higher than the initial marketing range of 90-95 cents. Investors who purchased the debt will earn a yield of 11%, significantly above traditional corporate bond rates, underlining the high-risk nature of the deal.

Sources cited by Reuters say the renewed interest in the X debt sale is partially driven by expectations that Donald Trump’s potential victory in the November U.S. presidential election could increase engagement on the platform. Musk has aligned himself with Trump and positioned X as a more “free speech-oriented” alternative to mainstream social media, a stance that could attract conservative audiences back to the platform. Some investors see this as a sign that advertising and subscription revenues may eventually recover.

Musk’s AI Bet

Another key selling point was that investors in the loan would gain exposure to X’s stake in xAI, Musk’s artificial intelligence startup. xAI is developing Grok, an AI chatbot integrated into X, which Musk has described as a competitor to OpenAI’s ChatGPT. Some investors saw this as an opportunity to benefit from the rapid growth of artificial intelligence, an industry that has attracted billions in venture capital investment.

However, not all investors were convinced. A fund manager at a large high-yield investment firm who was offered the loan declined to participate, citing concerns that X’s financial struggles remain unresolved. The fund manager noted that X’s debt carries no official credit rating, meaning there is no independent assessment of the platform’s ability to service its debt. This made the investment too risky, even at a discounted price.

Can the Banks Offload the Remaining Debt?

Despite successfully selling a portion of the loan, the banks still hold $7.5 billion in X-related debt. Whether they can unload the remaining amount at favorable terms will depend largely on whether Musk can reverse X’s financial decline. Since acquiring Twitter in 2022, he has aggressively cut costs, but his drastic changes have also scared away advertisers, leading to a significant drop in revenue.

Musk has attempted to pivot X towards a subscription-based model, but adoption has been slow, and recent reports suggest that the company’s financial outlook remains uncertain. If X’s revenues fail to rebound, the remaining debt may still be difficult to sell, leaving banks on the hook for billions in potential losses.

For now, the sale of $5.5 billion in debt is a sign that investor confidence in X is somewhat improving, but the long-term financial health of the platform remains an open question.

Nigeria, please do not do it and take the number of states to 67: “In what appears to be one of the most radical proposals in Nigeria’s political history, the House of Representatives Committee on the Review of the 1999 Constitution has put forward a plan to create 31 additional states, bringing Nigeria’s total to 67 states.”

The Proposed New States Across Nigeria

North-Central:
Benue Ala (from Benue State)
Okun (from Kogi State)
Okura (from Kogi State)
Confluence (from Kogi State)
Apa-Agba (from Benue South Senatorial District)
Apa (from Benue State)
Federal Capital Territory, Abuja (to be recognized as a full-fledged state)

North-East:
Amana (from Adamawa State)
Katagum (from Bauchi State)
Savannah (from Borno State)
Muri (from Taraba State)

North-West:
New Kaduna and Gurara (from Kaduna State)
Tiga (from Kano State)
Kainji (from Kebbi State)
Ghari (from Kano State)

South-East:
Etiti (as the 6th state in the South-East)
Adada (from Enugu State)
Urashi (as the 6th state in the South-East)
Orlu (from the South-East region)
Aba (from the South-East region)

South-South:
Ogoja (from Cross River State)
Warri (from Delta State)
Bori (from Rivers State)
Obolo (from Rivers and Akwa Ibom States)

South-West:
Toru-Ebe (from Delta, Edo, and Ondo States)
Ibadan (from Oyo State)
Lagoon (from Lagos State)
Ijebu (from Ogun State)
Another Lagoon (from Lagos and Ogun States)
Another Ibadan (from Oyo State)
Oke-Ogun and Ife-Ijesha (from Ogun, Oyo, and Osun States)

In my thesis, I do think Nigeria should even convert to 6 states, from the current 36 states. Why? The small states we have now do not have capacity to do anything worthwhile. But at a regional-state level, greater things can happen. Sure, that will reduce the number of governors, aides, etc [the reason that will not fly] but it will help the evolved states to dream bigger projects and get them done.

What we call states now excluding Lagos, Rivers, Akwa Ibom, Delta and maybe two extra, have no capacity for generation-shaping projects because they have no capacity. Then imagine dividing them further! Nigeria should not add more states.

Comment on Feed

Comment: On the contrary, the more States we have, the faster the urbanization and infrastructural development we will have.

My Response: Which infrastructure has Nigeria built in the capitals of Zamfara, Abia, Bayelsa, etc since they were created. Having buildings with exotic cars possibly means “urbanization and infras development” for you. But before that era, states BUILT factories, dams, catalytic projects that required huge sums. Today, states do not have that capacity. They only build markets, junctions and supply kekes. Just name one major project in any state created by Abacha in the last batch to 36 states.

We have local government areas to drive rural development. But that has not happened as your family budget is possibly bigger than most LGAs’

Response #1: I do believe your thesis of faster urbanization and infra development, but if you look at the current prevailing data the states we have today can’t fund themselves, most of them have transitioned into a parasitic kind of relationship with other states and the center.

If we look closely, the HoA that is proposing this move are only thinking about been governors or making their cronies governors and hoping to maintain this current system of governance where the states will survive anyhow.

I am of the opinion like Ndubuisi Ekekwe that if the states are merged into productive units, the tendency to grow faster and develop better will be more.

Response #2: , the more states you have, the more the cost of governance. The more the cost of governance, the less the resources that will be available for development, considering that the current structure already consists of states that are not independently self-sustaining…

Follow the logic.

It is the same logic we employ in Business Process Optimization: elimination of duplicate processes. More states means “duplicating” roles that already exist when there is already low capacity utilisation for such tasks. If you analyse the human resource utilisation of the existing state civil servants and politicians, it would not be out of place to suggest that for every 6 civil servants and politicians today, there should be 1.
Now this brings us back to @Ndubuisi Ekekwe’s suggestion of shrinking the structure to 6 states instead.

Comment: The unification decree of May 1966 promulgated by Aguiyi Ironsi that banned regionalism has destroyed a lot of things.
Prof, where do we go from here?

My Response: That is an easy way of looking at what General Ironsi did. From the thesis of the decree, it was not designed for development, but rather to reverse any sense of regionalization. So, he did put a military style solution towards de-emphasising regions after the coup. So, your thesis when you read the whole context of the decree may not be balanced. As a miliary, he wanted ONE nation, and not a nation of regions. It was not a development playbook, but possibly a unity one after a coup, trying to quench fire.

That said, whatever he did at the fangs of an exploding nation, Nigeria in 1979 had a constitution and could have made changes. Also, when Gen Gowon assumed the position of head of state, he could have reversed whatever decree Gen Ironi put across. Gen Ironsi spent less than 7 months but Gen Gowon ran the show for at least 8 years.

I think the 1979 Constitution is to be blamed and not what the generals did as they were not really focusing on development, but holding the country together.

Nigeria’s House of Representatives Proposes Creation of 31 Additional States