The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

All sales of FTX’s 35 high-end Bahamas properties must fetch a price that is “equal to or greater than 80 percent” of their broker-appraised values, it has been revealed.

John Ray, head of the 134 FTX entities in Chapter 11 bankruptcy protection in Delaware, disclosed in legal filings late on Tuesday night that all individual or aggregate sales worth $5m or greater will trigger notification of the crypto exchange’s US trustee and the official committee of creditors as part of the “sales procedures” agree with the Bahamian official liquidators.

“Without further order of the Court, the debtors are authorised to consummate the sale of any or all of the Bahamas properties in individual sale transactions or series of related sales to a single purchaser or group of purchasers if the chief executive of the debtors [Mr Ray] has approved such sale,” the documents filed with the Delaware Bankruptcy Court reveal.

Another condition is that “the aggregate sale price with respect to each Bahamas property sold pursuant to the sale is equal to or greater than 80 percent of the price stated in a broker price opinion produced by a real estate broker licensed in The Bahamas”.

Mr Ray is now seeking Delaware court approval of these terms, which have been agreed with Brian Simms KC, the Lennox Paton senior partner, and PricewaterhouseCoopers (PwC) accounting duo, Kevin Cambridge and Peter Greaves, in their capacity as liquidators of the crypto exchange’s Bahamian subsidiary, FTX Digital Markets.

Tribune Business revealed earlier this week that the sell-off of FTX’s high-end properties “will not be sufficient” to fully repay the $256.3m debt owed to the crypto exchange’s Bahamian subsidiary. Mr Ray alleged in previous documents that the estimated “total net sales proceeds” generated from disposing of 35 properties acquired for a combined $222m will not be enough to totally clear FTX Digital Markets’ claim.

These disclosures came as Mr Ray effectively admitted that part of the reason he decided to settle with the Bahamian liquidation trio was to gain some control over the sale of FTX’s Bahamian real estate portfolio and the proceeds.

His legal filings revealed that FTX Property Holdings’ Chapter 11 case could not be “recognised” in The Bahamas since that entity is Bahamian-incorporated. Thus, as a result, “no viable insolvency regime” exists through which Mr Ray and his team could control the properties’ sale and disposal.

Referring to FTX Property Holdings as FTX PropCo, Mr Ray said it was incorporated in The Bahamas on July 22, 2021 - almost two months before the crypto exchange received the necessary licensing and approvals to operate in this nation. Its sole purpose was to acquire, and hold, commercial and high-end real estate purchased for use by FTX and its senior executives.

“FTX PropCo conducted no business other than the purchase and ownership of real property in The Bahamas and does not have other significant assets,” Mr Ray affirmed. “The aggregate purchase price of the Bahamas properties was approximately $222m.

“Purchase prices paid by FTX PropCo in respect of each of the Bahamas properties range between approximately $500,000 and approximately $30m. Five properties were less than $1m; 24 properties were between $1m and $10m; three properties were between $10m and $15m, and three properties exceeded $15m.

“FTX Digital Markets is the largest creditor of FTX PropCo. On June 29, 2023, FTX Digital Markets filed a proof of claim against FTX PropCo in the amount of $256.291m in respect of loans allegedly granted by FTX Digital Markets to FTX PropCo for both the acquisition and maintenance of the Bahamas properties,” the FTX US chief added.

“Based on guidance from brokers in The Bahamas, the debtors currently estimate that the total net sale proceeds from the disposition of real estate owned by FTX PropCo will not be sufficient to pay the [$256m FTX Digital Markets claim] in full and, as a result, such claim is expected to be impaired in any Chapter 11 plan with respect to FTX PropCo.”

The nature of the “guidance”, or the brokers who provided it, were not identified. The extent of the recovery from selling-off FTX PropCo’s real estate holdings remains to be seen given that the high-end market for Bahamian real estate appears to be holding firm, though not quite at the levels generated by pent-up demand post COVID-19.

Most of FTX PropCo’s residential holdings are located in Albany, plus the GoldWynn development at Goodman’s Bay at One Cable Beach. The commercial properties include the site earmarked for FTX’s Bahamian headquarters at Bayside Executive Park on West Bay Street, plus Pineapple House and multiple units at the Veridian Corporate Centre.