TelexFree Trustee puts up ~40% recovery plan for vote
Just over a week ago the TelexFree Trustee announced he was working on a Plan of Liquidation for filing.
On May 6th the plan was filed, revealing what TelexFree victims can expect recovery wise.
As at the time of the filing, the TelexFree Trustee is sitting on around $176 million.
Here’s the split of that balance that will go towards recovery distribution:
- $156,471,294 from the DOJ, sans up to $7.5 million in fees (~$148 million)
- $2.5 million in SEC settlements, sans a 10% fee ($2.25 million)
- $18 million in available cash, sans payment of other claims and fees (amount unknown)
Based off these amounts the Receiver estimates that, under the proposed liquidation plan, TelexFree victims with claims less than $4250 can expect to recover a flat 43%.
Victims with claims approved claims greater than $4250 can expect to initially recover 39%.
Through additional distribution payments, this figure is expected to climb by 2% to 10% (41% to 49% total recovery).
Regarding the IRS tax settlement, the liquidation plan disclosure statement reveals the IRS settled with the Trustee for $7,741,220.
This settlement was reached following a court loss last month, and is down from the $429 million the IRS initially claimed.
With respect to the proposed liquidation plan;
The Chapter 11 Trustee believes that the Plan provides the quickest and largest recovery to creditors.
ACCORDINGLY, THE CHAPTER 11 TRUSTEE URGES ALL CREDITORS TO VOTE IN FAVOR OF THE PLAN.
I’m neither a lawyer nor an accountant, but the plan seems pretty fair to me.
Pending approval from the court, the liquidation plan will be put to the vote.
TelexFree victims with allowed claims will be eligible to vote. Note that if you sold your claim to a third-party you are not permitted to vote.
If the liquidation plan survives a vote, an “effective date” will be set and distribution payments scheduled.
If the plan is voted down;
there will be a substantial delay in you receiving a distribution and it is likely that you will receive less than the amounts proposed in the Plan.
Pending approval by the court and the result of the claimant vote, stay tuned…