Embattled Crypto Firm FTX Wants to Sell Its Functioning Units, Including LedgerX
Crypto exchange FTX petitioned a federal court for permission to sell several subsidiaries on Thursday, including U.S.-based derivatives wing LedgerX.
In a document filed to the Bankruptcy Court of Delaware, attorneys for FTX said it was a priority for the company's current management to "explore" the sale or find other strategic transactions for certain subsidiaries.
"Based on their preliminary review, the Debtors own or control a number of subsidiaries and assets that are regulated, licensed and/or largely not integrated into the Debtors’ operations, within and outside of the United States," the filing said. "The Debtors believe a number of these entities have solvent balance sheets, independent management and valuable franchises."
These units include LedgerX, which also did business as FTX US Derivatives, FTX Japan, FTX Europe and Embed Business.
Most of these entities were acquired by FTX relatively recently, meaning they operated largely independently of their global parent. As such, their assets and funds remain segregated from FTX, unlike some of the company's other subsidiaries.
In congressional testimony, FTX's new CEO, John Ray III said that even companies purportedly segregated from FTX like FTX US were not actually independent.
FTX filed for bankruptcy last month, saying in filings it had over $10 billion in liabilities.
‘Dozens’ of bids
FTX wants to sell these units quickly, the filing said. Many have had their operating licenses suspended since FTX itself filed for bankruptcy.
"The Debtors and/or the Businesses have been in active conversations with a number of regulators for the Businesses," the filing said. "The licenses held by FTX Europe have been suspended along with its operations, and FTX Japan is subject to business suspension and business improvement orders. The longer operations are suspended, the greater the risk to the value of the assets and the risk of a permanent revocation of licenses."
FTX has already received "dozens of unsolicited" – more than 100 – bids for the companies, the filing said. If the sales are approved, interested parties could bid for the different units, the filing said, suggesting possible bid dates for the various entities ranging from February to March. Preliminary bid dates stretch from mid-January to early February.
By these dates, aspiring purchasers would have to submit various documents verifying both their interest and their ability to bid for the businesses at auction.
Bidders will also need to verify their ability to secure regulatory approval for the sales.
If a would-be bidder navigates these hurdles, FTX would request hearings in March in front of the bankruptcy court.
Approving these sales would benefit FTX's creditors, the filing said.
"A sound business purpose for the sale of a debtor’s assets outside the ordinary course of business exists where such sale is necessary to maximize and preserve the value of the estate for the benefit of creditors and interest holders," the filing said.