Bahamas Arm Of Cryptocurrency Exchange FTX Files For Chapter 15 Bankruptcy: What It Means For Creditors

The Bahamas arm of cryptocurrency exchange FTX filed for Chapter 15 bankruptcy in the Southern District of New York, days after its parent company, along with its 130 other associated companies, declared themselves bankrupt. 

The paperwork, which was registered late Tuesday night, comes after a day after the Bahamas Supreme Court authorized temporary liquidators to manage FTX Digital's assets.

Kevin Cambridge and Peter Greaves of PricewaterhouseCoopers were appointed as joint interim liquidators, and Brian Simms of Lennox Paton was named as the court-supervised provisional liquidator.

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"In compliance with section 1515(c) of the Bankruptcy Code, I hereby declare that, to my knowledge, the only foreign proceeding (as such term is defined in section 101(23) of the Bankruptcy Code) pending with respect to FTX Digital is the Bahamian Liquidation," read the filing, submitted by Warren Gluck of Holland & Knight LLP, counsel for the joint provisional liquidators of FTX Digital Markets.

The process is designed to enable the orderly closure of international businesses so that money may be restored to creditors as fully as possible, which may include the site's numerous regular users.

The main thrust of the filings is that the U.S. courts ought to recognize the legal actions taking place in the Bahamas, which allows for the suspension of other creditor legal claims.

Other parties have three weeks to object before the court renders a decision under the U.S. bankruptcy statute.

Although the Bahamas branch of FTX.com was purportedly isolated from the American market, lawyers contend there is a connection to the United States through a client account that included $15,000 at New York law firm Holland & Knight.

Data from secondary markets indicate that creditors might anticipate receiving only 8–12 cents on the dollar for their claims against the defunct corporation once the U.S. business is wound up.

According to a formal notification from the Bahamas Securities Commission published on Sunday, it is possible that the company will be subject to a criminal investigation.

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