Bahamian liquidators reject validity of FTX's US bankruptcy filing

Brian Simms, the court-appointed provisional liquidator overseeing the bankruptcy proceedings of FTX Digital Markets successful The Bahamas, has called into question the validity of a Chapter 11 bankruptcy filing by subsidiary FTX Trading and 134 different affiliates successful a Delaware tribunal connected Nov. 14.

In the Nov. 15 document, Simms filed for Chapter 15 Bankruptcy successful the United States Bankruptcy Court successful the Southern District of New York, which is utilized erstwhile a overseas typical of the debtor seeks designation successful the U.S. for a pending overseas insolvency proceeding.

In the filing Simms notes FTX Digital is not portion of the Delaware Petition, and says arsenic the provisional liquidator helium is the lone one, "authorized to instrumentality immoderate enactment including, but not constricted to, filing the Delaware Petition," adding:

"The Provisional Liquidation Order divests FTX Digital's directors' of the quality to act, oregon workout immoderate functions, for oregon connected behalf of FTX Digital unless expressly instructed to truthful by maine successful writing."

The Bahamas-based lawyer argues due to the fact that helium "did not authorize oregon approve, successful penning oregon otherwise," helium rejects the "validity of immoderate purported effort to spot FTX Affiliates successful bankruptcy."

He further notes, "The full FTX Brand was yet operated from a azygous location: The Bahamas. All halfway absorption unit likewise were located successful The Bahamas."

FTX's integer plus speech was founded successful May 2019 by Samu Bankman-Fried successful Hong Kong but aft China's crypto ban, Bankman-Fried relocated the institution to the Bahamian superior of Nassau successful Sept. 2021.

Simms has not asked the tribunal to disregard the U.S. bankruptcy proceedings, stating "no provisional alleviation seeking the injunction oregon dismissal of the Chapter 11 is presently sought" but requests the U.S courts admit the ineligible actions taking spot successful The Bahamas.

However, helium notes “it is conceivable that the FTX Affiliates that filed Chapter 11 volition beryllium impacted by the provisional alleviation sought,” by his filing.

Related: FTX’s ongoing saga: Everything that’s happened until now

Chapter 11 is utilized by businesses to assistance them reorganize their debts and repay creditors portion continuing their operations.

The assignment of provisional liquidators followed the Bahamian securities regulator suspending FTX’s registration presumption and freezing its section subsidiary’s assets connected Nov. 10.