Bahamas liquidator rejects validity of FTX’s US bankruptcy filing

Brian Simms, the court-appointed interim liquidator overseeing the bankruptcy proceedings of FTX Digital Markets in the Bahamas, announced in a Delaware court on Nov. questioned the validity of the chapter bankruptcy filing.

In a Nov. 15 document, Sims filed for Chapter 15 bankruptcy in the United States Bankruptcy Court for the Southern District of New York. It is used when a foreign representative of a debtor seeks approval in the United States of a pending foreign bankruptcy proceeding.

Sims said in the filing that FTX Digital was not part of the Delaware petition and was the only person “authorized to do anything including but not limited to filing the Delaware petition” as interim liquidator. He said yes and added:

“The interim liquidation order will deprive the directors of FTX Digital of their ability to act or exercise any function for or on behalf of FTX Digital, unless I have explicitly directed so in writing.”

The Bahamas-based attorney claims to reject “the validity of any attempt to bankrupt FTX affiliates” because it “has not been authorized or approved in writing or otherwise.”

He added, “The entire FTX brand was ultimately operated in one location, the Bahamas. Likewise, all key management was also in the Bahamas.”

FTX’s digital asset exchange was founded by Hong Kong’s Sam Bankman-Fried (SBF) in May 2019, but after China’s cryptocurrency ban, SB decided to move the company to the Bahamas capital of Nassau in September 2021. moved to

Sims has not asked the courts to dismiss the U.S. bankruptcy proceedings, saying that “no interim relief seeking an injunction or dismissal of Chapter 11 is currently being sought,” although the U.S. courts have not yet been asked to do so in the Bahamas. We are requesting recognition of the legal action taken.

However, he states that with his submission, “it is conceivable that FTX affiliates who have submitted Chapter 11 will be affected by the interim relief sought.”

Related: FTX Story in Progress: Everything That Happened So Far

Chapter 11 is used by corporations to reorganize debt and repay creditors while continuing to operate.

The appointment of the interim liquidator follows the Bahamian securities regulator’s suspension of FTX’s eligibility to register and freeze the assets of its local subsidiary on Nov. 10.