IRS Asserts First Dibs On FTX Bankruptcy Payout To Recover $44 Billion In Taxes
The US Internal Revenue Service (IRS) has filed tax claims in the FTX bankruptcy as the defunct exchange’s creditors seek fund reimbursement. This recent report shows the IRS filed dues of $44 billion in taxes associated with FTX and its subsidiaries.
The disclosure revealed the agency filed the tax bill under administrative claims, prioritizing them over the creditors’ claims in the bankruptcy case.
Will Court Prioritize IRS Claims Over Creditors?
A filing by the IRS claiming billions of dollars in tax owed by Alameda Research has been circulating online. The filing shows the IRS is claiming over $20.4 billion in unpaid partnership and payroll taxes from Alameda Research alone under administrative priority.
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The IRS filed 45 claims worth $44 billion in unpaid taxes from the now-bankrupt FTX exchange and its sister companies. However, the tax filing category under administrative priority has drawn more attention than the amount after circulating the Internet.
A section of the US Bankruptcy Code states that claims under administrative expenses receive priority distribution. That means administrative claims have the highest priority among creditor claims in a bankruptcy case.
The IRS tax bill under administrative claims means the court will likely consider them during funds distribution before other unsecured FTX creditors. However, the dispute is still in motion, and the court is yet to determine how the filing affects the situation.
Nonetheless, the current situation sparked people’s curiosity. A partner at General Catalyst, Nick Van Eck, is curious about how to calculate the amount and where the funds will come from.
But while reactions across the internet continue to emerge, the IRS remained silent without providing any details regarding the matter.
FTX Closer To Repaying Creditors, Mulls Reopening Plans
This development came after the news that FTX recovered $7.3 billion in assets, which was revealed by lawyers in an April 12 hearing at the Delaware bankruptcy court.
FTT remains bearish l Source: Tradingview.comFurther investigations into the bankrupt exchange’s assets are still ongoing. However, the legal team disclosed that FTX may resume operations in Q2 of 2024.
Meanwhile, the exchange’s former CEO, Sam Bankman-Fried, remains entrapped in webs of criminal charges by US prosecutors. His legal team has been working hard to save him.
In a recent court hearing, SBF’s lawyers asked the federal judge to waive the criminal charges, saying the case was more of a civil issue. The legal team also accused FTX lawyers of helping the prosecutors.
Featured image from Pexels, chart from Tradingview.com