FTX wants Chapter 15 proceedings for FTX Digital, the Bahamian subsidiary of the distraught crypto ... [+]
Bahamian liquidators who have taken control of a subsidiary of FTX in their Caribbean nation want to move the parent company’s liquidation to New York from Delaware, potentially complicating the unraveling of the failed cryptocurrency exchange.
Lawyers for provisional liquidators of FTX Digital argued during a hearing Thursday morning that at the time the parent had filed its Delaware bankruptcy petition on November 11, the Securities Commission of Bahamas had already placed the Bahmanian unit into liquidation proceedings. That would have barred the parent company from making the filing in the federal court in Wilmington, Delaware, without the liquidators’ permission, they contended. The liquidators petitioned for a chapter 15 proceeding–used in conjunction with overseas bankruptcies–for FTX Digital, which ran a cryptocurrency exchange in the Bahamas.
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FTX representatives took the opposite tack, asking the Delaware court to take over the chapter 15 proceedings, in which over 100 subsidiaries of FTX have filed for chapter 11 bankruptcy protection. FTX cited “first to file” rules for their request. FTX Digital was not included in the initial chapter 11 filings. Michael Wiles, the judge presiding over the New York case, agreed to wait for the Delaware court’s decision before making his own ruling on the liquidators’ motion..
Warren Gluck, partner at Holland and Knight and counsel for the joint provisional liquidators argued that the New York court’s involvement in other crypto-winter bankruptcies including lender Celsius
FTX filed the Chapter 11 case after a liquidity crisis brought down the high-profile crypto exchange and CEO Sam Bankman-Fried, who resigned just before the court proceedings commenced. Doubts about the value of the exchange’s native FTX Token led to a spate of customer asset withdrawals that the company could not meet.
