Bahamas FTX Liquidators Agree to Transfer Bankruptcy Case to Delaware
Court-appointed liquidators overseeing collapsed crypto exchange FTX's assets in the Bahamas have agreed to transfer a related case they'd filed in New York to Delaware, where the company had already filed for bankruptcy protection.
While the embattled company FTX Trading Ltd. had filed for chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware on Nov. 11, the Bahamian liquidators later filed a chapter 15 suit in the Southern District of New York for FTX Digital Markets, one of the companies under the broader FTX umbrella and the name of the entity located in The Bahamas. The liquidators at the time said FTX, which was headquartered in the Bahamas, was not allowed to file for bankruptcy in the U.S.
Before reaching an agreement on the transfer of the case, FTX filed a complaint seeking a court order to make the liquidators file their chapter 15 case, which targets cross-border insolvency, in Delaware.
"We had filed with your honor a motion to transfer that case from the Southern District of New York to the district of Delaware, and we are pleased to report that we have reached an agreement with the joint provisional liquidators to do just that to bring the case from New York and here to Delaware," James Bromley, a partner in Sullivan & Cromwell’s Finance & Restructuring Group said during the first FTX bankruptcy hearing on Tuesday.
But the agreement doesn't necessarily mean everything is rosy between what's left of FTX and regulators in the Bahamas. In FTX's filing opposing the liquidators' complaint, it said it had evidence that the government of the Bahamas had directed unauthorized access to FTX assets after it had filed for bankruptcy.
Bromley reiterated during his Tuesday presentation that FTX was in possession of evidence showing "there have been movement of assets out of the debtors' estates to the Bahamas." He added that there had 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."
The Securities Commission of the Bahamas announced last week that it had ordered assets in FTX's crypto wallets to be transferred to government-controlled wallets on the previous Saturday.
"It is essential to keep in mind as we are going forward in dealing with any of these foreign entities and with respect to any regulators or liquidators that might be appointed, that we're focusing on a single word which is reciprocity," Bromley said.