FTX Appoints New Claims Agent
A claims and notice agent such as Kroll is often appointed for bankrupt companies with more than 1,000 creditors.
The failed cryptocurrency exchange, FTX, has chosen the restructuring administration firm, Kroll, as its agent. Kroll will keep track of all claims against FTX and make sure that interested parties are kept up to date as its Chapter 11 bankruptcy case moves forward.
The report states that on November 12, FTX Trading hired Kroll to investigate any potential claims that may have been filed against them or any of their 101 connected firms. This announcement was made public on November 17.
FTX Group has established Kroll as its claims agent, and all official documents filed with the U.S. Bankruptcy Court can be found online at https://t.co/7Bsn9Ggckf. pic.twitter.com/OFuCmlJXgJ
— FTX (@FTX_Official) November 17, 2022
This database is currently sparse, with only eight claims (including an $11.7 million claim from Singaporean blockchain development business Ethereal Tech). Nonetheless, it will quickly become comprehensive as more allegations are submitted against the organization.
For instance, one of the other cases that Kroll has worked on, the Chapter 11 bankruptcy case of the rental car company Hertz, has 62,061 claims against it.
When Would FTX Customers Receive Their Money?
Although FTX Trading is believed to owe customers and investors as much as $8 billion on its own, the eight claims presently being considered have already accumulated to $40.9 million.
The company has also included a list of interested parties and it will keep informed of developments in the filing. However, the list is not complete and does not include customers at this time.
About 750 people or organizations are on this list with a stake in the case’s outcome. These stakeholders range from individuals with debt to banks, landlords, insurance companies, board members, and government agencies.
Companies like Wells Fargo, Bank of America, National Australia Bank (NAB), Facebook, Stephen Curry, JPMorgan, Circle, Apple, Reddit, Chainalysis, and Yuga Labs are on the list.
Meanwhile, it’s estimated that FTX has more than a million debtors. Margaret Rosenfeld, a corporate securities lawyer, said it would take years before any of them start to receive any money back.
She added that the company would not be able to make distributions to creditors until these claims have been investigated. Followingly, she stated that it is also too early to make any predictions on the type of return creditors will receive from the distribution.
As a branch of Kroll LLC, a provider of corporate intelligence, Kroll Restructuring Administration deals with the management of company reorganizations. Interestingly, Harvey Weinstein hired them multiple times, including when sexual harassment allegations were brought against him in 2016.
The parent firm is a firm in several areas, including environmental, social, and corporate governance (ESG), valuation, compliance, cyber risk, investigations, and corporate finance, to name just a few.
The provisional liquidator monitoring the bankruptcy proceedings of FTX Digital Markets in The Bahamas has rejected the validity of any putative attempt to place FTX Affiliates in bankruptcy, which is an argument made by the regulators in The Bahamas on November 15.