FTX Seeks Court Approval to Sell Off Japanese and European Subsidiaries
Lawyers representing FTX in bankruptcy proceedings have filed with a U.S. court to obtain permission to sell off several of the firm’s assets, including its Japanese and European branches, as well as its derivatives exchange LedgerX and stock-clearing platform Embed.
In a filing on Dec. 15, the lawyers noted that these businesses are under pressure from regulatory bodies, which justifies the need for an expedited sale process. They explained:
“The longer operations are suspended, the greater the risk to the value of the assets and the risk of a permanent revocation of licenses.”
Currently, FTX Japan is subject to business suspension and improvement orders, while FTX Europe has had its licenses and operations suspended.
Since FTX filed for bankruptcy on Nov. 11, the businesses have reportedly faced a loss of customers and employees. The lawyers believe that selling these assets now will allow operations to resume and maximize value for the FTX estate.
Notably, the FTX lawyers highlighted that these companies were recently acquired and had been operating largely independently from the main FTX entity, making any potential sale process less complex.
If more than one bidder emerges, the auctions for these businesses are slated to start on various dates in early 2023:
- Embed: February 21
- LedgerX: March (exact date TBD)
- FTX Japan and Europe: March (exact dates TBD)
Reports suggest that over 110 parties are interested in potentially purchasing one or more of the 134 companies involved in the bankruptcy proceedings. To date, FTX has entered into 26 confidentiality agreements with interested counterparties.
Amid this, LedgerX has been recognized as a particular success story in the context of the bankruptcy. Commodity Futures Trading Commission Chairman Rostin Behnam noted that LedgerX had effectively been “walled off” from other entities within the FTX Group, additionally holding more cash than all other FTX debtor entities combined.
As the motion seeks to reassure stakeholders, FTX lawyers assert that selling off portions of its once-prominent groups will prevent further deterioration in value and mitigate the risk associated with regulatory action.
