A group of FTX customers has filed a limited objection to FTX’s plan to sell four independently operated subsidiaries, arguing that they should be privy to the sales process to ensure that customer interests are represented.
The group has also shared concerns that “misappropriated customer funds” may have been used to acquire or keep these firms running.
There was one exception to this rule. filed Dec. 4, an ad hoc panel of non-U.S. customer representatives, made up of 18 members, who collectively have more than $1.9 million in claims against FTX.
In its filing, it argued that the previous public statements of FTX, Securities and Exchange Commission and Commodity Futures Trading Commission made clear that customers own the customer assets.
It said there were “significant concerns over the lack of information regarding sale of the businesses,” and also questioned whether the businesses may be “necessary to a potential restart” of FTX.
A limited objection is similar in nature to an objection, but it applies only to a particular part of the proceedings. This limited objection arises from the exclusion of an ad hoc commission from the sale process.
Ad Hoc Committee is the only one I have seen to mention a possible FTX restart to court – one reason they list for filing they limited objections to FTX’s planned sales subunits of solvent. pic.twitter.com/7TCW3WwRm0
— FTX Creditor (@AFTXcreditor) January 5, 2023
The committee has asked the judge to allow them to serve as “consulting professionals” so that they can ensure customers’ interests are represented throughout the bidding process, adding:
“The Ad Hoc Committee does not seek to stand in the way of value-maximizing transactions that the Debtors may pursue, so long as the interests of FTX.com customers are protected.”
According to the bid procedures proposed, only consultants professionals will be able attend the auction and consult FTX on matters relating. The committee points out that the parties to the consultation have no control over the sale process other than being able counsel.
Related: Report: US authorities seize $460M worth of Robinhood shares linked to FTX.
FTX had filed a bankruptcy petition asking the court to permit them to sell off its European, Japanese and derivatives exchange LedgerX as well as stock-clearing platform Embed.
LedgerX in particular has been hailed as a success story during the bankruptcy proceedings, with Commodity Futures Trading Commission Chairman Rostin Behnam noting that the firm had essentially been “walled off” from other companies within FTX Group, and “held more cash than all the other FTX debtor entities combined.”
Last week, the same committee asked for customers’ names and private information to be redacted from court documents, suggesting that customers could be exposed to identify theft, targeted attack and “other injury.”