The Tribune

• Local liquidators move to dispose of vehicle fleet

• Auto dealer expects to sell 60% ‘within 30 days’

• But puts buyers on notice: ‘This is not a fire sale’

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

An auto dealer yesterday disclosed he expects to sell 60 percent of the former FTX vehicle fleet assigned to him within 30 days, but warned: “This is not a fire sale.”

Fred Albury, the Auto Mall’s principal, told Tribune Business he has “no doubt the vehicles will move fairly quickly” as the crypto exchange’s Bahamian provisional liquidators begin the process of selling-off assets to recover funds owing to clients and creditors.

Brian Simms KC, the Lennox Paton senior partner, and PricewaterhouseCoopers (PwC) accounting duo, Kevin Cambridge and Peter Greaves, in an October 18, 2023, update to FTX Digital Markets’ creditors confirmed they have initiated a sales process to seek buyers for the Bahamian subsidiary’s vehicle fleet some 11 months following its implosion.

Backed by the Supreme Court’s June 22, 2023, Order authorising the move, they signalled that they could not wait any longer because the autos are “depreciating assets” that will continue to lose value the longer they remain unused, thus undermining investor recoveries.

The FTX Digital Markets liquidators are using a consignment sales process, which will see both the Auto Mall and Nassau Motor Company (NMC) only pay them for the vehicles that they sell. The two auto dealers, in the role of consignee, will have the right to return the vehicles that do not sell to the liquidators without incurring any liabilities or obligations.

“A sale of the vehicles by consignment is underway,” the joint provisional liquidators informed FTX Digital Markets creditors. “The joint provisional liquidators can advise that the selected consignees of the vehicles are presently Nassau Motor Company [and] Auto Mall/Executive Motors.  Please contact the consignment parties if you wish to express interest.”

No information was provided on the potential collective value of FTX’s former vehicle fleet, or the number of autos involved, and the Bahamian provisional liquidators could not be reached for comment before press time last night. However, their first report to the Supreme Court on February 8, 2023, suggested the combined worth of the vehicles, together with office furniture and equipment, was around $3m.

“FTX Digital Markets also owns approximately $3m in ancillary assets, including a vehicle fleet for employees based in The Bahamas and office furniture and equipment. The joint provisional liquidators view the vehicle fleet as a depreciating asset and will shortly seek the sanction of the Supreme Court to proceed with an orderly realisation,” they said.

The Bahamian liquidator trio have now, eight months later, executed on this promise. While some observers will view the several million dollars likely involved as relatively insignificant, given the estimated $8bn-$10bn hole in FTX’s accounts when it collapsed in November last year, the move nevertheless represents the first tangible asset sell-off in The Bahamas to recover monies due to investors and creditors.

“It just started,” Mr Albury told Tribune Business of the sales process. “We collected the first set of vehicles yesterday. We’re just evaluating the vehicles and probably will have some prices set for next week. We’ve got ten so far, and there’s a few more to come after that.

“We’re working out the details, and inspecting the vehicles in the first instance. They’ve been sitting for a while. We’ve got to check them, and look at the tyres and batteries. We’ve got to clean them up, check the mileage and see what the fair market value will be. There’s a notion going around that there’s some sort of fire sale on this, but that’s not the case.

“The liquidators have an obligation to do their due diligence, and try and fetch as much as they can for the creditors, and that’s what’s happening.” Mr Albury said the vehicles he received are mostly Toyotas, but also included “a couple of BMWs”.

“I think we’ll possibly get between 15-20 vehicles, somewhere in that range. There’s some Volkswagens, there’s a few Nissans. I think that’s about it. We’re doing the usual depreciation based on condition and mileage that anyone else, if a private individual came in, that’s what they would wish,” he added.

The Auto Mall chief said that, while a small number of vehicles dated from 2019, most were “fairly current” models from 2021 and 2022. “There are a couple from 2023, which must be some stuff they took just weeks or a few months before the end,” Mr Albury added.

“There’s been a lot of inquiries. I have no doubt the vehicles will move fairly quickly. I have no doubt we’ll dispose of them. I expect that we’ll dispose of at least 60 percent within 30 days. I think they will be a good deal for people who are interested out there.”

He said Auto Mall has agreed a 30-day contract with the FTX Bahamian liquidators as part of a rolling deal that will see the agreement renewed for another 30 days depending on performance.

Mr Simms and his PwC colleagues signalled their plans for FTX Digital Markets’ vehicle fleet in their May 24, 2023, report to the Supreme Court, in which they wrote: “The joint provisional liquidators have completed the vehicle fleet appraisal process. Valuations have been obtained from two independent appraisers.

“The joint provisional liquidators require the sanction of the Supreme Court of The Bahamas in order to commence selling assets. As substantially all of the motor vehicles, IT and office equipment are depreciating, the joint provisional liquidators are in the process of filing an application for sanction from the court in order to sell these assets.

“The joint provisional liquidators invited offers from local dealerships and bulk equipment purchasers in respect of these assets, and will advertise locally for sale to ensure an appropriate level of price discovery. The joint provisional liquidators continue to insure the company’s vehicle fleet and seek to recover a portion of the associated costs at the end of the insurance policy period as vehicles are sold and secured.”

A recently-published book on FTX founder, Sam Bankman-Fried, revealed that many of the crypto exchange’s expatriate employees abandoned their company-financed vehicles at Lynden Pindling International Airport (LPIA) when they fled The Bahamas in November 2022 following the company’s collapse.

“Some meaningful percentage of the company’s fleet of cars had been abandoned, keys still inside them, in The Bahamas airport lot,” wrote Michael Lewis, author of ‘Going Infinite: The Rise and Fall of a New Tycoon’.

It remains to be seen whether John Ray, head of the 134 FTX US entities in Chapter 11 bankruptcy protection in Delaware, will seek to thwart the Bahamian vehicle sell-off given that he has repeatedly intervened whenever the FTX Digital Markets liquidators attempt to make recoveries for the benefit of their estate.

Thus far, some 45,878 individuals, 958 institutions and 86 trade creditors have submitted a collective 46,922 claims against FTX Digital Markets, but it still has to be determined which assets and clients belong in which estate - the Bahamian liquidation, or the Chapter 11 proceedings in Delaware. Once that is worked out, it will then be necessary to decide which assets belong to creditors and which to the exchange.