FTX gets approval of bid procedures, despite trustee objection

By Sarah Lizee

Olympia, Wash., Jan. 12 – FTX Trading Ltd.’s motion seeking bid procedures for the sale of its assets was approved Thursday by the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, the motion drew an objection from Regions 3 and 9 U.S. trustee Andrew R. Vara.

Vara had said the bid procedures provide very little information regarding what is being sold, before any investigation has been conducted into the events that caused the debtors to file for bankruptcy.

As previously reported, FTX is looking to sell the following businesses:

• Non-debtor Embed Clearing LLC, a correspondent clearing and custody platform;

• Non-debtor LedgerX LLC, a digital currency futures and options exchange and clearinghouse;

• FTX’s Japan business, which may involve the sale of 100% of the interests in FTX Japan Holdings KK held by FTX Trading, or separate sales of 100% of the interests in FTX Japan KK or Quoine Pte Ltd. (FTX Singapore) held by FTX Japan Holdings; and

• FTX’s Europe business, which may involve a sale of 100% of the interests in FTX Europe held by FTX Trading, or sales of stock and/or assets of FTX Europe or its subsidiaries.

For organizational purposes, the Embed business and the LedgerX business are part of the “WRS Silo,” and the Japan and Europe businesses are part of the “Dotcom Silo.”

FTX said no final decision has been made to sell any of the businesses, and any sale would still be subject to the approval of the independent directors of the debtors, as well as approval of the court.

At the time of filing the bid procedures, the company said it had entered into 26 different confidentiality agreements with potential counterparties who have expressed interest in its businesses, and it is in the process of entering into a number of additional agreements.

Under the bid procedures, the company will be able to pick one or more stalking horse bidders any time up until six days prior to an auction. Bid protections would include a 3% breakup fee and an up to 0.5% expense reimbursement. The expense reimbursement is capped at $1.25 million for any individual business.

To become a qualified bidder, potential bidders must submit an indication of interest by the preliminary bid deadline. The deadlines for each business are as follows: 5 p.m. ET on Jan. 18 for the Embed business, 5 p.m. ET on Jan. 25 for the LedgerX business and 5 p.m. ET on Feb. 1 for the Japan and Europe businesses.

Final bid deadlines are 5 p.m. ET on Feb. 15 for the Embed business, 5 p.m. ET on March 1 for the LedgerX business and 5 p.m. ET on March 15 for the Japan and Europe businesses.

Auctions will be held on Feb. 21 for the Embed business, March 7 for the LedgerX business and March 21 for the Japan and Europe businesses.

Sale hearings would take place on Feb. 27 for the Embed business, March 13 for the LedgerX business and March 27 for the Japan and Europe businesses.

FTX has headquarters in The Bahamas. The company filed Chapter 11 bankruptcy on Nov. 11 under case number 22-11068.

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