> they cashed out everyone's Tether balances to fiat?
"Cashing out" means receiving hard currency. It appears Bitfinex plans on converting Tether balances into Bitfinex brokerage balances. This still depends on Bitfinex paying out dollars for its obligations, regardless of whether they're cryptocurrency Tethers or broker balance entries in a spreadsheet.
Any Tether deposits initiated before 14:30:00 UTC on the 27th of November will be credited to the user's fiat wallet balances