FTX debtors have filed a motion with the court requesting that its Turkish subsidiaries be dismissed from Chapter 11 bankruptcy proceedings. Lawyers for the defunct cryptocurrency exchange believe that firing the entities “is in the best interests” of the debtors. FTX’s creditors, and debtors do not believe that Turkish authorities “or any liquidators” in the country will cooperate with US officials.
FTX lawyers plead to expel Turkish subsidiaries from bankruptcy proceedings
According to a recent bankruptcy court filing, FTX debtors have filed a motion to remove the company’s Turkish entities from Chapter 11 proceedings. FTX-related units named in the court filing include FTX Turkey and SNG Investments. The debtors claim that FTX Turkey was a locally operated crypto exchange and SNG Investments was a wholly owned Alameda Research subsidiary acting as a market maker.
Shortly after FTX’s collapse, lawyers say that “Turkish authorities substantially froze and confiscated all assets of Turkish debtors.” FTX’s lawyers insist that the two entities should be expelled from bankruptcy proceedings, as they “believe it is in the best interest of debtors and their stakeholders.” Furthermore, debtors do not believe that the Turkish government complies with the US bankruptcy process.
“The debtors do not expect the Turkish authorities or any trustee in Türkiye to seek recognition of their actions in the United States, and the debtors would attempt to challenge such recognition if reciprocity is not established,” the filing explains.
The news follows FTX lawyers asking the court for permission to subpoena FTX co-founder Sam Bankman-Fried (SBF) and his inner circle. He presentation notes that while SBF has publicly stated that it would like to “explain what happened” and “try to help customers,” it “has not responded to or complied with” requests. “As a result, a court authorized subpoena is necessary,” the attorneys explained in the motion. In the latest filing, the debtors stress that the dismissal of the Turkish debtors’ Chapter 11 cases “is justified.”
Furthermore, since the Turkish authorities froze the debtors’ assets, a Chapter 7 conversion “would not serve the best interests” of the debtors’ assets and creditors, the filing adds. The court document also details that the funds were seized by the Turkish government because the Turkish Financial Crimes Investigation Board (MASAK) was conducting an investigation into FTX’s business dealings. The lawyers conclude that the bankruptcy court would have no “legal or practical effect” in Turkey.
What do you think about the recent motion by FTX debtors to dismiss their Turkish subsidiaries from Chapter 11 bankruptcy proceedings? Share your thoughts in the comments below.
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