A federal judge has taken action to resolve a long-standing dispute between FTX and its main creditor during a bankruptcy hearing. This indicates that the court may try to expedite the process of recovering funds for FTX customers from the failed cryptocurrency firm’s estate.
U.S. Judge John Dorsey, presiding over the Delaware Bankruptcy Court, has set a hearing for early next year to determine the amount FTX owes to the IRS in cryptocurrency.
This specific issue has been a major obstacle, causing delays in compensating the numerous victims of the exchange. Since the IRS is FTX’s largest creditor, settling its claim is crucial before the victims of FTX can begin recovering their losses.
In the context of tax court bankruptcy, the goal is to efficiently reach accurate conclusions without unnecessary expenditure of time and resources from the state or other creditors. This was emphasized towards the end of the hearing.
The court’s calculation of FTX’s tax liability may not necessarily result in a significant increase in the amount the IRS can reclaim. Typically, the IRS prioritizes receiving payments during corporate bankruptcy proceedings.
However, Judge Dorsey has cautioned the IRS to manage its expectations, suggesting that a recovery in the multi-billion-dollar range may not be realistic.