In short: The IRS has filed claims against entities of the FTX Group for over $40 billion in unpaid taxes, casting doubt on the company's ability to re-open for business. As recently as January, FTX's 50 biggest creditors were owed around $3 billion, manageable for a company with good investments in its portfolio. However, the IRS claims dwarf any prior ones and would need to be paid off before unsecured creditors. It remains to be seen how this will be pursued by the IRS.
Our quick analysis:
In the latest chapter of the FTX Group's bankruptcy case, the IRS has made some seriously hefty claims against the default entity. And we're not talking about a measly few million bucks here. We're talking about claims totaling a staggering $44 billion.
To put it into perspective, the 50 biggest creditors of FTX were owed about $3 billion combined. Now the IRS has swooped in and taken the biggest slice of the pie, rendering any other claimants to the casual scraps.
So what's the deal? Well, apparently an investigation by the IRS found that FTX personnel had been incorrectly classified as contractors, when they should have been classified as employees. And as a result, FTX is now facing a monumental tax bill. Ouch.
It's not looking good for FTX, especially when you consider that under the US bankruptcy code, Uncle Sam has priority over unsecured creditors. So the $20.4 billion tax bill needs to be paid off before any other creditors see a dime.
For those who thought the bankruptcy case was nearing its end, this is a harsh reminder that things can always get worse. It remains to be seen how this will play out in court, but one thing is for sure: the FTX Group's bankruptcy woes have reached "taxing" new heights.
Image provided by Unsplash
Disclaimer: Our articles are NOT financial advice, and we are not financial advisors. Your investments are your own responsibility. Please do your own research and seek advice from a licensed financial advisor beforehand if needed.
Our quick analysis:
In the latest chapter of the FTX Group's bankruptcy case, the IRS has made some seriously hefty claims against the default entity. And we're not talking about a measly few million bucks here. We're talking about claims totaling a staggering $44 billion.
To put it into perspective, the 50 biggest creditors of FTX were owed about $3 billion combined. Now the IRS has swooped in and taken the biggest slice of the pie, rendering any other claimants to the casual scraps.
So what's the deal? Well, apparently an investigation by the IRS found that FTX personnel had been incorrectly classified as contractors, when they should have been classified as employees. And as a result, FTX is now facing a monumental tax bill. Ouch.
It's not looking good for FTX, especially when you consider that under the US bankruptcy code, Uncle Sam has priority over unsecured creditors. So the $20.4 billion tax bill needs to be paid off before any other creditors see a dime.
For those who thought the bankruptcy case was nearing its end, this is a harsh reminder that things can always get worse. It remains to be seen how this will play out in court, but one thing is for sure: the FTX Group's bankruptcy woes have reached "taxing" new heights.
Image provided by Unsplash
Disclaimer: Our articles are NOT financial advice, and we are not financial advisors. Your investments are your own responsibility. Please do your own research and seek advice from a licensed financial advisor beforehand if needed.
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Please, behave!