Non-performing asset funds can buy FTX bankruptcy claims at maximum 20% price in OTC market
It is reported that a person familiar with the matter said that non-performing asset funds can purchase FTX bankruptcy claims at a maximum price of 20% in the …
It is reported that a person familiar with the matter said that non-performing asset funds can purchase FTX bankruptcy claims at a maximum price of 20% in the private OTC market. After FTX, it now owes $3.1 billion to the 50 largest creditors. In some open bankruptcy markets, the transaction valuation of bad FTX assets is about 16% of the claim face value. The individual claims listed for sale on Xclaim, the platform that provides transaction encryption claims, are up to 27 million US dollars. An anonymous FTX creditor said that the pricing of the private OTC market was similar, and the purchase price of the non-performing asset fund was between 15% and 20% of the nominal value of the claim. “Their purchase is expected to receive funds within five years. If these funds finally receive 25% of the money within five years, this is not a good deal, because the annual recovery rate is only about 5%. I think many of these companies are expected to recover funds equivalent to 50% of the face value of the claim.”
Insiders: FTX bankruptcy claims are sold at 20% in the private OTC market
Interpretation of the news:
The message is reporting that non-performing asset funds have the opportunity to purchase FTX bankruptcy claims at a maximum price of 20% in the private OTC (over-the-counter) market. This is done through Xclaim, a platform that provides encryption claims transactions, where individual claims of up to $27 million are listed for sale. After FTX, which was a cryptocurrency derivatives exchange, folded, it is now indebted to its 50 largest creditors to the tune of $3.1 billion.
The report also suggests that in some open bankruptcy markets, the transaction valuation of bad FTX assets is around 16% of the face value of the claim. An anonymous FTX creditor was quoted as saying that the pricing in the private OTC market was similar, and that the purchase price for non-performing asset funds was between 15% and 20% of the claim face value.
The article concludes by highlighting the risk of such investments for these funds. It mentions that the purchase is expected to receive funds within five years, and even if they were to receive 25% of the money during this period, the annual recovery rate would only be about 5%. However, the expectation is that many of these companies may recover funds to the tune of 50% of the face value of the claim.
In summary, non-performing asset funds are presented with the opportunity to purchase FTX bankruptcy claims at a maximum price of 20% through the OTC market. While the purchase price may appear attractive, investors need to be aware of the high risk involved with investing in non-performing assets. The recovery rate is low, and there is no guarantee if or when investors will actually receive the funds.
Overall, the message is a cautionary one, warning investors to exercise due diligence when considering such an investment. It highlights the potential risks, but also presents the possible rewards, indicating that investors who play their cards right could secure a good return.
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