In order to ensure that their interests are reflected, a group of FTX customers contends that they should be included in the sales process. This group has filed a limited objection to FTX’s plan to sell four separately operated companies.
The group has expressed worry over the possibility that “misappropriated client cash” were used to buy or maintain these businesses.
An ad hoc committee of non-U.S. consumers, consisting of 18 members, who have combined claims against FTX totaling more than $1.9 billion, submitted the limited objection on December 4.
The committee said in its petition that prior public declarations made by FTX, the Securities and Exchange Commission (SEC), and the Commodity Futures Trading Commission make it abundantly clear that the client assets on the platform are owned by consumers, not the firm.
The absence of information on the sale of the firms, it claimed, had raised “serious concerns,” and it was also questioned whether the businesses may be “essential to a prospective restart” of the firm.
Similar to an objection, a restricted objection simply pertains to a particular aspect of the proceedings. The limited objection in this case results from the ad hoc committee’s exclusion from the selling procedure.
In order to guarantee that consumers’ interests are reflected throughout the bidding process, the committee has requested that the judge grant them the right to act as “consulting experts,” further adding,
“The Ad Hoc Committee does not seek to stand in the way of value-maximizing transactions that the Debtors may pursue, so long as the interests of FTX.com customers are protected.”
Who Can Attend Bid And Consult With FTX?
The committee emphasises that the consultation parties have no authority over the process other than the ability to provide guidance, and that only consulting professionals will be permitted to attend the auction and confer with FTX on issues relevant to the sale process.
On December 15, FTX requested permission from the bankruptcy court to sell its European and Japanese subsidiaries, as well as the derivatives exchange LedgerX and the stock-clearing platform Embed.
In particular, LedgerX has received praise for performing well during the bankruptcy proceedings. Rostin Behnam, chairman of the Commodity Futures Trading Commission, noted that the company had essentially been “walled off” from other businesses within the firm’s Group and “held more cash than all the other FTX debtor entities combined.”
The same committee requested last week that the names and private information of consumers be removed from court records, claiming that doing so could expose customers to identity theft, targeted attacks, and “other injury.”