A group of FTX creditors, led by Sunil Kavuri, has opposed the reorganization plan proposed by the bankrupt exchange's managers. In a court filing dated June 5, the creditors argued that the plan does not meet the best interest standard. Sunil Kavuri noted that the plan is legally unconfirmable due to provisions that do not benefit the estate, including releases that overlook property rights issues.

Specifically, the creditors objected to FTX's proposed cash repayment, which they argued would trigger taxable events for them. They suggested that an in-kind distribution could avoid these tax liabilities, emphasizing the additional hardships that customers would face due to forced taxation on cash receipts.

Moreover, the creditors insisted that FTX update its disclosure statement for IRS settlement, incorporating the examiner's report. This objection follows a recent agreement to settle tax claims with the IRS, under which the IRS would receive a $200 million priority claim within 60 days of approval, followed by another $685 million lower-priority claim after customers are fully compensated.

Earlier, on May 7, FTX's bankruptcy managers had announced a reorganization plan that promised full cash repayment to creditors. According to this plan, creditors with claims under $50,000 would receive 118% recovery within 60 days of court approval, while other non-governmental creditors would be compensated for their entire claims along with up to 9% interest.