FTX bankrupt but still alive – Following the FTX bankruptcy filing and its 130 affiliated partners, it is legitimate to ask the question of the continuation or not of its activities. What will happen to the platform now and especially to the customer funds still blocked on it? This is where Chapter 11 of the US bankruptcy law comes into play. Explanations.
The beginnings of a controlled fall?
Following theexample of celsius Earlier this year, it was FTX’s turn to file for bankruptcy with US institutions.
This under chapter 11 of the bankruptcy law in the United States. On the other hand, unlike the bankruptcy generally encountered in Europe, this is not a complete cessation of activity. FTX will not immediately go into bankruptcy and compulsory liquidation. Because in this case, she would have applied chapter 7. Chapter 11 is a little different.
In reality, an American company places itself under Chapter 11 protection when it is no longer able toassume one’s debt or pay its creditors. This is the case of FTX. On the other hand, the company retains control of operations, under the supervision of the court. It is in this sense that the transfer of power between Sam Bankman-Fried and John Ray. The latter, a lawyer by training, takes over the position of CEO of the company. A situation he knows well by the way. Because he is one of the people who supervised the liquidation from Enronan energy broker convicted of fraud and financial manipulation in 2001.
FTX in bankruptcy, the many collateral victims
In principle, this law will allow FTX to escape payment of its debts. While remaining under the control of a committee made up of its main creditors. In other words, it is once again the users who will be the stuffing turkeys. A restructuring plan will be put in place under the aegis of the American authorities within 120 days from this Friday, November 11. Response therefore by March 10, 2023.
The tricky thing for all the people and organizations involved in the story is that all goods and payment deadlines are pushed back. The repercussions and chain reactions are therefore likely to be particularly significant given the octopus that was FTX. There is no doubt that in the days and weeks to come, we risk discovering all the consequences of this drama, which strongly resembles a new mt gox.
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