FTX has announced a significant decision regarding the allocation of proceeds from government forfeiture actions, setting aside up to $230 million specifically for certain shareholders rather than creditors. This move has sparked controversy, particularly among creditors who traditionally expect to be reimbursed before shareholders in bankruptcy proceedings. The agreement was finalized after the deadline for creditors to vote on the reorganization plan, and its revelation came as a surprise, leading to frustration and feelings of betrayal among creditors. The FTX estate, which is managing the bankruptcy process, argues that this reimbursement strategy is intended to prevent costly litigation and delays associated with the forfeiture proceeds. The plan stipulates that 18% of all proceeds from government forfeiture actions will be allocated to a special fund for the exclusive benefit of preferred shareholders, with the total amount capped at $230 million. This decision was made official on August 28, but creditors were not informed until September 27, which was the last day allowed for filing amendments to the plan. Critics, including representatives from creditor groups, have expressed their discontent, claiming that ordinary creditors had no opportunity to voice their opinions on this provision. Many creditors feel that they have been scammed again, as they had voted overwhelmingly in favor of the plan without knowledge of this new agreement. The FTX estate's filing suggests that both the debtors and preferred shareholders have a mutual interest in avoiding the costs and delays that could arise from litigation over the forfeiture proceeds. The FTX estate has estimated the total value of the forfeiture proceeds to be around $1.19 billion, which includes various assets such as cash, digital assets, and even private planes. The allocation of 18% of these proceeds aligns closely with the $230 million set aside for shareholders. Additionally, the plan allows for each shareholder to receive up to $250,000 for legal fees from the segregated fund. Despite the bankruptcy plan receiving preliminary support from creditors, there are concerns about the actual recovery amounts. Creditors are expected to receive at least 118% of their claim value in cash, but some representatives argue that the real recovery will be significantly lower when considering the value of cryptocurrencies at the time of bankruptcy compared to their current market value. The confirmation hearing for the FTX reorganization plan is scheduled for October 7, where a judge will decide on its approval. The estate is required to report the results of the creditor vote by September 30, which is also the deadline for filing any responses to objections regarding the plan. This situation highlights the complexities and tensions inherent in bankruptcy proceedings, particularly in the volatile cryptocurrency sector.