The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

FTX’s remaining Bahamas-based staff were paid a collective $635,297 through to end-January 2023 as provisional liquidators explore “options” that may include restarting its trading platform, it was revealed last night.

Brian Simms KC, the Lennox Paton senior partner, and PricewaterhouseCoopers (PwC) accountants Kevin Cambridge and Peter Greaves, in their first interim report to the Supreme Court confirmed all bar 16 of FTX Digital Markets’ employees had either left the collapsed crypto exchange or been terminated at end-January.

They added that virtually all the Bahamian subsidiary’s 49 expatriate employees, out of a total 83-strong workforce, fled the jurisdiction within hours of it being placed into provisional liquidation. This, the trio added, deprived them of potentially critical information on FTX Digital Markets operations and finances, with few subsequently co-operating with their investigations or accounting for company property in their possession.

“During the collapse of the FTX Group, and following the negative media publicity surrounding the difficulties being experienced by the FTX Group, many of The Bahamas-based expatriate workers departed the country before the joint provisional liquidators were able to liaise with them and have subsequently not made themselves available for questioning,” the report revealed.

“Furthermore, a number of key individuals have not made themselves available for questioning due to the ongoing criminal investigations.... Many of these employees have not accounted to the joint provisional liquidators in respect of their whereabouts or FTX Digital property that they may hold and, with the exception of a few individuals, many of the expatriate employees have been unavailable in The Bahamas for work during the period of the provisional liquidation.”

The Bahamian provisional liquidation trio added that they retained 33 FTX Digital Markets employees for 11 weeks, or almost three months, following their November 10, 2022, appointment to “maximise optionality” in reorgansing the failed crypto exchange. This, though, could not be sustained beyond end-January as FTX had ceased to function although “the possibility of restructuring the company” remains live.

“Following their appointment, the joint provisional liquidators concluded that it was necessary to meet the ordinary salary requirements of certain employees of the company to facilitate the pursuit of a reorganisation and assist in the investigation of FTX Digital’s affairs; albeit the joint provisional liquidators did so without personally adopting their contracts,” the report said.

“Accordingly, salary costs, medical insurance and, where elected, pension entitlements have been met for a total of 33 employees as an expense of the provisional liquidation and covering the period November 2022 to January 2023, inclusive. Amounts totalling $635,297 have been met by the company in respect of these employment costs.”

Terminated employees were informed of their fate on January 17, 2023, in accordance with the Employment Act’s statutory two-week notice period, and they will rank among the priority creditor classes if they have any outstanding debts owed to them by FTX such as unpaid wages, pension contributions and accrued holiday allowance.

“The joint provisional liquidators currently continue to employ a total of 16 individuals to assist with the ongoing investigations into the company and the possibility of restructuring its business. Terms with each of these persons were entered into on an individual basis and contracts were effective from November 10, 2022,” Mr Simms and the PwC duo wrote.

That restructuring could involve the possible restart, restructuring or sale of FTX’s international trading platform that was overseen by FTX Digital Markets. The platform, its associated technology and intellectual property rights to it are a potentially major recovery source for creditors and clients. For this reason, it is being argued that the provisional liquidation should extend beyond the traditional six months to allow time for this.

“There has been interest expressed to the joint provisional liquidators by various third parties who wish to invest in and/or otherwise purchase certain parts of the FTX Digital business, including the FTX international platform. The joint provisional liquidators have held discussions with those third parties, where considered appropriate,” the Bahamian trio said.

Warning that FTX Digital Markets’ licence, and any value in it, would likely be lost if the exchange was placed into full liquidation, they added they they were exploring “the development of options to maximise returns to creditors via a platform reorganisation, which could include restarting the FTX international platform in some format.

“The joint provisional liquidators are co-operating with the Chapter 11 debtors in this regard, but it is thought likely that it will take three to four months to agree a plan that will then take time to implement.” The Bahamian trio added that talks with interested parties were in their “infancy”.