FTX Debtors Demand Dismissal of Turkish Companies in Chapter 11 Bankruptcy Battle

Written by Joy Rice

FTX debtors have taken a crucial step in the Chapter 11 bankruptcy proceedings by submitting a motion to the court, calling for the dismissal of their Turkish subsidiaries. Represented by lawyers, the debtors believe that dismissing the entities would serve the best interests of creditors. Furthermore, they do not have faith in the Turkish authorities or liquidators to work with officials from the United States.

FTX Lawyers Argue for Expelling Turkish Subsidiaries From Bankruptcy Proceedings

FTX debtors have taken action in the Chapter 11 proceedings by filing a motion to dismiss the company’s Turkish entities. The court filing lists FTX Turkey and SNG Investments as the units in question. FTX Turkey is described as a locally operated crypto exchange while SNG Investments, a subsidiary of Alameda Research, served as a market maker. The debtors’ motion aims to remove these entities from the proceedings.

FTX’s lawyers claim that shortly after the crypto exchange’s collapse, Turkish authorities took action by freezing and seizing the majority of the assets of the Turkish entities. The lawyers have requested that these entities be removed from the bankruptcy proceedings, arguing that it is in the best interests of the debtors and their stakeholders. Additionally, the debtors are not confident that the Turkish government will cooperate with the U.S. bankruptcy process.

“The debtors do not expect the Turkish authorities or any liquidator in Türkiye to seek recognition of their actions in the United States, and the debtors would intend to object to such recognition if reciprocity is not established,” the filing explains.

The latest development in the FTX bankruptcy proceedings involves lawyers seeking the court’s permission to subpoena co-founder Sam Bankman-Fried (SBF) and his associates. Despite SBF publicly expressing a desire to provide explanations and assist customers, he has not responded to requests, leading the lawyers to request a court-authorized subpoena. Meanwhile, the debtors emphasized that dismissing the Turkish entities’ Chapter 11 cases is necessary, as noted in their latest filing.

Moreover, given that Turkish authorities froze the debtors’ assets, a Chapter 7 conversion “would not serve the best interests” of the debtors’ estates and creditors, the filing adds.

According to the court document, the Turkish government’s seizure of assets was due to an investigation being conducted by the Turkish Financial Crimes Investigation Board (MASAK) into FTX’s business operations. The lawyers argue that the bankruptcy court would have no legal or practical influence in Turkey.

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