Bankrupt crypto exchange FTX begins strategic review of global assets
As part of the recent bankruptcy filing, the defunct crypto exchange FTX, along with 101 of the 130 affiliated companies, announced the launch of a strategic review of their global assets. The review is an attempt to maximize recoverable value for stakeholders.
FTX, at the time led by CEO Sam Bankman-Fried (SBF), filed for Chapter 11 bankruptcy on Nov. 11 after being caught misappropriating user funds. The bankruptcy filing sought to cushion the losses of stakeholders connected to FTX and affiliated companies, a.k.a FTX debtors.
1/ Sharing a Press Release issued early today - FTX launches strategic review of its global assets. Text below (and link). https://t.co/wxz9MYnXrn
— FTX (@FTX_Official) November 19, 2022FTX debtors are in talks with financial services firm Perella Weinberg Partners for various sale or reorganization attempts. However, FTX cautioned that “the engagement of PWP is subject to court approval.”
SBF’s replacement, CEO John J. Ray III, confirmed that FTX affiliates have solvent balance sheets, which could be sold or restructured to cut losses. While highlighting that some subsidiaries, such as crypto exchange LedgerX, are exempted as debtors in the bankruptcy filing, he added:
“Either way, it will be a priority of ours in the coming weeks to explore sales, recapitalizations or other strategic transactions with respect to these subsidiaries and others that we identify as our work continues.”Moreover, FTX debtors have parallelly filed motions seeking interim relief from the bankruptcy court, which is slated to be heard on Nov. 22, 2022. While no deadline for sale or restructuring has been set, Ray requested all stakeholders “to be patient.”
Related: FTX leadership pressed for information by US subcommittee chairman
On Nov. 19, the law firm assisting FTX and SBF amid bankruptcy backed off from representing the entrepreneur, citing conflicts of interest.
According to Paul, Weiss attorney Martin Flumenbaum:
“We informed Mr. Bankman-Fried several days ago, after the filing of the FTX bankruptcy, that conflicts have arisen that precluded us from representing him.”Flumenbaum believed that Sam Bankman-Fried’s “incessant and disruptive tweeting” negatively impacted the reorganization efforts of the lawyers.