FTX, a Crypto Exchange that Just Declared Bankruptcy, has Begun a Strategic Evaluation of Its Global Assets

Debtors of FTX have entered into discussions with the financial services firm Perella Weinberg Partners regarding a variety of sale or reorganization options. However, in order to proceed with the hiring of PWP, approval from the bankruptcy court is required.

The now-defunct cryptocurrency exchange FTX, together with 101 of the 130 linked companies, has announced the beginning of a strategic examination of the companies’ worldwide assets as part of the recent bankruptcy case. The review is an attempt to optimize the amount of recovered value for the various stakeholders.

After being detected misappropriating user cash, FTX, which was run at the time by CEO Sam Bankman-Fried (SBF), filed for Chapter 11 bankruptcy on November 11. SBF was the CEO at the time. The purpose of the bankruptcy case was to ease the financial burden placed on stakeholders associated to FTX and affiliated enterprises, also known as FTX debtors.

Debtors owed money to FTX have entered into discussions regarding a variety of sale or reorganization options with the financial services firm Perella Weinberg Partners. Nevertheless, FTX issued a warning that “the employment of PWP is subject to court approval.”

CEO John J. Ray III, who took over as SBF’s replacement, has confirmed that FTX affiliates have solvent balance sheets and that these companies could be sold or restructured in order to reduce losses. While pointing out that certain subsidiaries, like the cryptocurrency exchange LedgerX, are exempted from the bankruptcy filing as debtors, he continued by saying:

“Either way, it will be a priority of ours in the coming weeks to explore sales, recapitalizations or other strategic transactions with respect to these subsidiaries and others that we identify as our work continues.”

In addition, debtors associated with FTX have concurrently submitted motions to the bankruptcy court requesting interim relief. These motions are scheduled to be heard on November 22, 2022. Ray has asked all of the parties involved to “be patient” because there has been no decision made regarding the timing of the sale or the restructuring.

On November 19, the law firm that had been assisting FTX and SBF during their bankruptcy with legal matters decided not to represent the entrepreneur, citing potential conflicts of interest.

The following is what attorney Martin Flumenbaum from Paul, Weiss claims:

“We informed Mr. Bankman-Fried several days ago, after the filing of the FTX bankruptcy, that conflicts have arisen that precluded us from representing him.”

Flumenbaum was of the opinion that Sam Bankman-Fried’s “continuous and disruptive tweeting” had a negative impact on the reorganization efforts that the lawyers were making.

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