FTX's new CEO said on Saturday that the bankrupt exchange is looking to sell or restructure its global empire, even as regulators and FTX squabble in court files and press releases about whether the Chapter 11 filing should proceed in New York or Delaware.
FTX chief John Ray said in a statement that many regulated or licensed subsidiaries of FTX, within and outside of the United States, have solvent balance sheets.
Ray said it is a priority to explore sales, recapitalizations or other strategic transactions with respect to the subsidiaries.
There were a lot of Saturday morning filings in Delaware bankruptcy court. FTX requested permission to pay outside vendors, consolidate bank accounts, and establish new ones.
It's not clear when a possible sale will happen. FTX stated that it does not intend to disclose further developments unless and until it determines that further disclosure is appropriate or necessary.
FTX and the Bahamas securities regulators are trying to get jurisdiction over the process of bankruptcies in the US. In an emergency court filing, FTX attorneys accused the Bahamian regulators of moving hundreds of millions of dollars of "digital assets" into their own.
Some of the company's healthy subsidiaries were praised by Ray. The Commodity futures trading commission regulates derivatives platforms. One of the few FTX-related properties that aren't part of the bankruptcy proceedings is LedgerX. FTX acquired the platform in the year 2021.
Employees, vendors, customers, regulators and government stakeholders were asked to be patient by the FTX CEO.
There could be more than one million debts in these Chapter 11 cases, according to FTX.
A total of 216 bank accounts were identified by FTX and its accountants. Cash balances across all entities totaled $564 million, with $268.6 million of that in the custody of LedgerX.
FTX attorneys want to use a "cash pooling system," merging all the cash assets of each FTX entity into one consolidated balance statement and in new bank accounts, which FTX is currently in the process of opening
FTX attorneys wrote that they were working with existing FTX banks to make sure that prior authorized signatories don't have access to any prior FTX accounts. According to prior reporting and court filings, Sam Bankman-Fried had complete control over cash and account access.
The bank accounts of FTX show the influence of the empire. There are institutions in Cyprus, Japan, and Germany. More than a dozen accounts were held by FTX subsidiaries at Signature Bank. Major American banks are not included with the exception of one Bank of America account. FTX bought Blockfolio in the summer of 2020.
Lawyers for FTX moved to get $9.3 million for vendor payments. Criteria for "critical vendor" status were established by the FTX motion.
FTX attorneys applied to the court for permission to redact certain confidential information for their customers. FTX's ability to sell off assets or businesses could be jeopardized by the public dissemination of their customer list.
The proceedings should continue in Delaware. The Bahamas want to hold a Chapter 15 process in New York because they don't believe in the authority of Chapter 11 proceedings.
The hedge fund Three Arrows Capital filed for Chapter 15 reorganization. The implosion of Three Arrows led to a crisis that has taken down several other companies.
The Chapter 11 process that FTX seeks would allow for the company to be restructured or sold to the highest bidder. Before pulling it, the rival exchange made an offer. There was a billion-dollar hole at FTX because of that turn around.
The first hearing in FTX's case will be held in Delaware.
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