FTX’s amended plan contains an exculpation clause that could absolve Sullivan & Cromwell, along with all debtors, of future liabilities.
While FTX’s new amended proposal promised “billions in compensation,” creditors are unhappy with a particular clause related to law firm Sullivan & Cromwell (S&C).
FTX’s new amended proposal to repay creditors, released on May 7, contains an exculpatory clause, which is a provision that relieves certain parties of liability if damages are caused during the execution of the bankruptcy process.
In the case of FTX, S&C may have included the clause to absolve themselves from any potential liabilities, according to popular FTX creditor Sunil, who is part of the largest group of over 1,500 FTX creditors, the FTX Customer Ad-Hoc Committee.