FTX debtor and its Bahamian subsidiary commence simultaneous bankruptcy proceedings across jurisdictions, Bahamian real estate up for sale

Last November, the cryptocurrency exchange FTX, which filed for bankruptcy protection in the United States, announced on Tuesday that they had reached a global settlement with their Bahamas subsidiary FTX Digital Markets. Both parties agreed to work together to maximize compensation and coordinate claims, ensuring that customers will receive similar compensation regardless of where they file their claims. The highlight of the settlement is the disposal of Bahamian real estate, which is expected to return a significant amount of funds to creditors.

US and Bahamas Cross-Border Collaboration

The debtors stated that the agreement is a "novel and mutually beneficial resolution to the complex cross-border legal issues arising from the collapse of the FTX Group." The plan is still pending approval from the United States Bankruptcy Court for the District of Delaware and the Supreme Court of the Bahamas.

To facilitate the distribution to FTX.com customers, FTX debtors and FTX Digital Markets will pool assets and coordinate the establishment of reserves as well as the timing and amount of distributions to ensure that FTX.com customers receive substantially similar benefits in both proceedings.

Eligible FTX.com customers are expected to choose in the second quarter of 2024 through a plan vote or through a separate process to determine which jurisdiction they opt for coordination and payment of their claims.

All claims of FTX.com customers, except those related to cash or digital assets and NFTs, will be valued in USD in both proceedings from the applicable petition date, without differential payments due to asset price fluctuations post-petition.

FTT equity will be treated as equity and will not receive any recovery.

FTX Restructuring Plan Sparks Market Controversy: Cryptocurrency claims evaluated at "bankruptcy-time value"

The Major Highlight is Bahamas Real Estate

The agreement also includes significant agreements between FTX debtors and FTX Digital Markets regarding FTX Group assets. If approved by the court, FTX Digital Markets will lead the maximization of value for Bahamas real estate and other assets and take specific litigation and revocation actions determined by global courts.

According to previous reports, FTX founder SBF and subsidiary co-CEO Ryan Salame spent 256.3 million USD to acquire and control 35 properties in the Bahamas. If these can be disposed of, it is believed to potentially return a substantial amount of funds to creditors.