FTX Debtors and their Bahamian Subsidiary Successfully Achieve Historic Resolution
FTX Trading has reached a settlement with the liquidators of its Bahamian unit, FTX Digital Markets, in a groundbreaking agreement that aims to resolve the contentious dispute over the precedence of US bankruptcy proceedings versus the Bahamian liquidation process. This landmark settlement, which still requires approval from the U.S. Bankruptcy Court for the District of Delaware and the Supreme Court of the Bahamas, signifies a new era of cooperation in handling complex crypto insolvency cases.
According to the terms of the agreement, FTX and FTX Digital Markets will combine their assets and synchronize their approaches to valuing customer claims. This coordinated effort ensures fair treatment for customers involved in insolvency proceedings in either country.
An important aspect of this agreement is that most customers of FTX.com’s international crypto exchange will now have the option to seek repayment from either the US bankruptcy proceedings or the Bahamian liquidation. This flexibility is crucial in addressing customer concerns and simplifying the claims process.
FTX Digital Markets will also align its know-your-customer (KYC) procedures with those of the U.S., the Bahamas, and other relevant jurisdictions. This demonstrates a commitment to adhering to diverse legal standards and maintaining regulatory compliance during bankruptcy proceedings.
Another significant aspect of the agreement is the liquidation of FTX’s real estate holdings in the Bahamas, led by FTX Digital Markets. This strategy is an integral part of the broader asset management plan, which aims to maximize returns from these holdings for the benefit of stakeholders.
John J. Ray III, CEO and chief restructuring officer of FTX, acknowledges the challenges involved in resolving the conflicts between the filings of FTX debtors and FTX Digital Markets. He sees this agreement as a crucial milestone in navigating these complexities.
Brian Simms and Peter Greaves, the Bahamian liquidators, emphasize that the agreement will avoid years of prolonged litigation, expedite the return of funds to customers, and simplify the overall process.
Regarding equity holders, the agreement makes it clear that interests against FTX debtors and FTX Digital Markets held by FTT will be treated as equity. As a result, these holdings will not be eligible for recovery, establishing clear boundaries for equity stakeholders in this complex bankruptcy case.
Tags: FTX