FTX Chapter 15 petition transferred to Delaware

FTX US revealed yesterday that an agreement was reached with the Bahamian appointed joint provisional liquidators to transfer their Chapter 15 bankruptcy petition in New York to Delaware and that it hopes to engage in constructive dialogue with the liquidators in the future.

James Bromley, proposed co-council for FTX US in the Chapter 11 case, suggested  that there has been tension with the JPLs and FTX US.

FTX Trading and 134 affiliates (the debtors) filed for Chapter 11 bankruptcy in the US on November 11. FTX Digital Markets, which was incorporated and based in The Bahamas, was not a part of that filing.

“Your honor may also be aware that the joint provisional liquidators have filed a petition before the southern district of New York bankruptcy court to recognize the proceedings in The Bahamas under Chapter 15 of the bankruptcy code,” Bromley said in a Delaware court.

“We have filed with your honor a motion to transfer that case from the southern district of New York to the District of Delaware

“We are pleased to announce that we have reached an agreement with the joint provisional liquidators to do just that, to bring the case from New York to Delaware.

“It is our wish to engage in a constructive dialogue with the joint provisional liquidators.

“However, as we noted in our pleadings to transfer, we do have evidence that there have been movement of assets out of the debtors’ estates to The Bahamas. There have been somewhat cryptic comments that have been issued by the government of The Bahamas as to the actions they have taken with respect to certain assets.

“It is sufficient to say at this point your honor to say that the debtors reserve all of their rights with respect to any request by the joint provisional liquidators to recognize the proceedings here and with respect to any relief they may request.”

In court filings last week, FTX Trading Ltd. said it has credible evidence that the government of The Bahamas directed unauthorized access to its systems in order to obtain digital assets after FTX had filed for Chapter 11 bankruptcy in the US.

FTX Trading also blasted the Bahamian joint provisional liquidators, who were appointed by the Supreme Court to oversee the winding up of FTX Digital in The Bahamas, for filing a Chapter 15 bankruptcy petition in New York.

It said Sam Bankman-Fried, the former CEO of FTX, appears to be supporting the joint provisional liquidators.

The joint provisional liquidators are seeking recognition of The Bahamas liquidation as a foreign proceeding under the US bankruptcy code “because FTX Digital maintains its center of main interests in The Bahamas”.

The Securities Commission of The Bahamas, which froze FTX’s assets on November 10, applied to the Supreme Court to appoint Brian Simms, KC, as a court supervised provisional liquidator.

On November 13, the commission announced that the court also approved Kevin Cambridge and Peter Greaves of PricewaterhouseCoopers as joint provisional liquidators.

FTX, a cyrptocurrency exchange with a presence in over 20 countries, hit troubled waters this month when a report leaked to a media outlet showing that Alameda Research, a hedge fund ran by Bankman-Fried, and FTX had close financial ties, even though they are supposed to be separate businesses.

Binance CEO Changpeng Zhao, who heads the world’s largest crypto exchange, tweeted that he was pulling out of FTX due to recent revelations that came to light.

The impact of that announcement was swift and more than $5 billion of withdrawal requests were made to FTX.

FTX was unable to process the requests because it did not have the money. That lead to the SCB freezing its assets and the Bankman-Fried filing for Chapter 11 protection in the US.

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Travis Cartwright-Carroll

Travis Cartwright-Carroll is the assistant editor. He covers a wide range of national issues. He joined The Nassau Guardian in 2011 as a copy editor before shifting to reporting. He was promoted to assistant news editor in December 2018.

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