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FTX could have over 1 million creditors, bankruptcy filing shows

By:
on Nov 15, 2022
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  • FTX's collapse could see its creditors total over 1 million, court documents show.
  • The crypto exchange filed for bankruptcy last week and is the biggest collapse in crypto so far.
  • FTX bankruptcy overseer wants the court to allow it sent notices to creditors via email.

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FTX’s creditors across its many subsidiaries could be more than 1 million, details in court documents filed on Monday suggests.

Sam Bankman-Fried’s FTX and its over 100 affiliate companies filed for Chapter 11 bankruptcy last week, with SBF resigning from the CEO role. The bankruptcy process is being overseen by John J. Ray III, a veteran insolvency overseer.

As per documents submitted in court, Ray and the Debtor team are seeking to have all of FTX’s 100+ entities treated jointly and not individually. In rhis case, FTX seeks to have all of its entities allowed to file a single list of the overall top 50 creditors, rather than each having to do a top 20 list.

The document then reveals the Chapter 11 cases across the collapsed SBF ’empire’ has over 100,000 creditors – and it could go way over 1 million. Part of the filing reads:

“Bankruptcy Code section 521(a) and Bankruptcy Rule 1007(d) require a debtor to file a list containing the name, address, and claim of the creditors holding the 20 largest unsecured claims against the debtor. As set forth in the Debtors’ petitions, there are over one hundred thousand creditors in these Chapter 11 Cases. In fact, there could be more than one million creditors in these Chapter 11 Cases. As such, the Debtors submit that cause exists to modify that requirement such that the Debtors will file a consolidated list of their top 50 creditors.”

FTX seeks court approval to notify creditors via email

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FTX also wants the court to allow it to serve notice of bankruptcy to its creditors via email and not to their physical addresses (homes). 

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According to the filing, the debtors see use of email as not only the best way to get to over 100,000 creditors, but it’s also likely to ensure more participation.

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“Not only is this likely the most efficient manner by which service of all interested parties can be completed, it is also the most likely to facilitate creditor responses because the customer base currently receives all notices electronically from the Debtors.”

As Invezz highlighted on Monday, FTX’s quant trading firm Alameda Research is reported to have used funds from FTX customers to trade. The firm lost billions of dollars on leverage and margin positions.

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