FTX’s Bahamian Liquidators Seek Control of 35 Properties

Bahamian liquidators overseeing the wind-down of an FTX subsidiary are seeking to dismiss the US-filed bankruptcy of another FTX entity, claiming they’re owed $256.3 million.

The Chapter 11 case of FTX Property Holdings, which owns 35 properties in the Bahamas, should be dismissed because all its assets and creditors are located on the island, the liquidators of FTX Digital said in a filing Monday with the US Bankruptcy Court for the District of Delaware.

FTX Property has no connection to the US, the Bahamian court-appointed liquidators argued.

The request highlights a simmering international turf war over the collapsed cryptocurrency business, which filed for bankruptcy last month.

“Respectfully, this Court is not the best forum to resolve the issues this case would present,” the liquidators said.

Insolvency proceedings for Bahamas-based FTX Digital began on the island on Nov. 10. More than 130 FTX-related entities, including FTX Property, subsequently filed for bankruptcy in the US.

The liquidators’ motion came on the same day that FTX’s former CEO and co-founder, Sam Bankman-Fried, was arrested. He was charged with eight criminal counts Tuesday, including conspiracy and wire fraud for allegedly misusing billions of dollars in customers’ funds before the spectacular collapse of his cryptocurrency empire.

FTX Property owes FTX Digital $256.3 million, the liquidators said. FTX Digital is the largest creditor of FTX Property, they said.

The liquidators filed for Chapter 15 protection on behalf of FTX Digital last month. The liquidators seek US bankruptcy court recognition of the Bahamian insolvency process under Chapter 15 of the bankruptcy code.

FTX Property’s two directors as of July 2021 were Bankman-Fried and Ryan Salame, the liquidators said. But only Bankman-Fried signed the papers that supposedly authorized the entity’s Chapter 11 petition, the liquidators said.

Bahamian courts have jurisdiction over the real estate and “cannot recognize” the Delaware court’s orders, the liquidators said. Bahamian law doesn’t allow recognition of a foreign insolvency proceeding for a Bahamian company, they said.

The case is FTX Trading, Bankr. D. Del., No. 22-11068, motion 12/12/22.