The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The FTX settlement shows The Bahamas has “beaten expectations” and “proven the doom and gloom naysayers wrong” over the crypto exchange’s collapse, a well-known businessman argued yesterday.

Sir Franklyn Wilson, the Arawak Homes and Sunshine Holdings chairman, told Tribune Business that the agreement struck between FTX’s Bahamian liquidators and their US counterparts demonstrates that this nation is “a serious” and “fit and proper jurisdiction” for financial services, digital assets and dealing with complex cross-border insolvencies.

Disclosing that, in the aftermath of FTX’s November 2022 implosion, there was “no one in the financial services space who was not deathly afraid” of the potential negative consequences for The Bahamas’ jurisdictional integrity and reputation, he added that two sides’ settlement was evidence that these fears to-date were unfounded.

Sir Franklyn suggested that John Ray, head of the 134 FTX entities in Chapter 11 bankruptcy protection in Delaware, by entering into the agreement with FTX Digital Markets’ liquidators “had to concede he was wrong on something”. He added that the deal, which has to be approved by both the Delaware Bankruptcy Court and Supreme Court, places the local liquidators on equal standing with their US counterparts.

“In my view, any such agreement is a positive one for the creditors,” Sir Franklyn said of a settlement that appears likely to end a year of litigation and public acrimony between the two sides. “We must never forget that a liquidation, first and foremost, is for the interests of the creditors. I commend the principals of both sides for arriving at this point because it’s definitely in the interests of creditors.”

Asked whether the settlement agreement will boost The Bahamas’ standing and minimise any further fall-out from FTX’s collapse, he replied: “Let me say that when the issue of FTX first started, I do not recall one authority in the financial services space who was not deathly afraid as to the impact of the FTX collapse on the jurisdiction.

“It was where everyone I spoke to, it was the forecast and suggested it was going to have a significant adverse effect. The fact we have gotten to this point and proven all of those naysayers wrong is clearly a very good thing for the country. All persons concerned deserve our commendation and appreciation.”

Brian Simms KC, the Lennox Paton senior partner, and PricewaterhouseCoopers (PWC) accountant duo, Kevin Cambridge and Peter Greaves, in their capacity as FTX Digital Markets liquidators said their agreement with Mr Ray will create one unified claims process designed to speed up the return of assets belonging to tens of thousands of creditors.

The two sides said the deal is based on combining assets from both estates into a single pool with creditors able to select where they will submit their claim - The Bahamas or Delaware. Double dipping, or submitting claims in both jurisdictions, will not be permitted.

The agreement will see the local trio “take the operational lead” in seeking to recover assets for creditors and investors via the sale of $256m worth of high-end Bahamian real estate acquired by FTX in developments such as Albany, GoldWynn and One Cable Beach.

And Mr Simms and his PwC colleagues will also be “pursuing specific litigation and avoidance actions” under their agreement with Mr Ray in a bid to further maximise recoveries for creditors. Included among these targets are likely to be the 1,500 “Bahamian” investors who collectively got $100m out at the time FTX collapsed, which violated both Supreme Court and Chapter 11 asset freezes.

Sir Franklyn, meanwhile, said the fact The Bahamas did not appear to lose substantial digital assets and financial services business as a result of FTX’s collapse meant the country can treat the settlement agreement and outcome as “a win”.

“Given the doom and gloom predictions at the start, I would say we beat expectations, and when you beat expectations it’s a win,” he told Tribune Business. “In these things, when there is no negative, when you don’t lose activity because of something that happens, that’s a win.

“We have to be realistic in how we define a win. The mere fact we did not lose, that’s the win. If you go back to the predictions when this thing started, the prediction was we would lose. To get to this agreement, the other side [Mr Ray] had to concede he was wrong on something. That’s a win. The mere fact we are in a situation where we did not lose because of this thing, that’s a win.”

Sir Franklyn said he also “trusts” that events will encourage those who voiced fears The Bahamas’ reputation will be irretrievably damaged by the FTX debacle to “be a little slower in arriving at a point that places us in a negative context”.

He added: “The fact of the matter is we are a serious jurisdiction, we have responsible regulators, we are a country with an independent judiciary, so when these things happen hopefully today’s outcome will give more of us additional confidence to trust our strengths as opposed to expressing ourselves on what may be perceived as weaknesses...

“Let’s hope that we do not have more liquidations because, at the end of the day, that somebody has failed and something went wrong. I don’t want to hope for more liquidations but, to the extent should they happen, we can make the point The Bahamas is a fit and proper jurisdiction.”

Sir Franklyn knows some of what FTX’s Bahamian liquidators have been through. He served as liquidator for Commodore Computers, which in the 1980s and early 1990s was arguably that industry’s biggest name, and he and his attorney, the late Paul Adderley, were able to reach an agreement with US creditors over how the company was to be wound-up.

“I was the court-appointed liquidator for Commodore Computers in the early 1990s, which at one time was one of the world’s biggest names,” Sir Franklyn recalled to this newspaper previously. “The fact of the matter is that The Bahamas survived Commodore Computers. It was a New York Stock Exchange listed company, truly a global company when that matter came up as being settled in the courts of The Bahamas.

“We had dozens of attorneys, maybe hundreds, in the courts. The creditors committee of the US subsidiary came to The Bahamas, objected to The Bahamas being the centre for the liquidation. It’s the same issue here. We got through that. Myself, Paul Adderley and the creditors committee, we were able to negotiate an agreement where the liquidation proceeded in both jurisdictions. The same problem here.

“When people come here they must see competent judges. They must see competence within the judiciary. That’s what they must see. They must see our regulators holding the line. They must see that in our attorneys in The Bahamas they are equal to those on Wall Street or Bay Street, Toronto. That’s what they must see. They must see competence.”

Asked yesterday about the parallels and similarities between FTX and Commodore Computers, Sir Franklyn said: “History has a way of repeating itself. We were a strong and robust jurisdiction then, and The Bahamas is a strong and robust jurisdiction now.”