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Tag Archives: creditors
Collapsed FTX owes nearly $3.1 billion to top 50 creditors
Nov 20 (Reuters) – Cryptocurrency exchange FTX, which has filed for U.S. bankruptcy court protection, said it owes its 50 biggest creditors nearly $3.1 billion.
The exchange owes about $1.45 billion to its top ten creditors, it said in a court filing on Saturday, without naming them.
FTX and its affiliates filed for bankruptcy in Delaware on Nov. 11 in one of the highest-profile crypto blowups, leaving an estimated 1 million customers and other investors facing total losses in the billions of dollars. read more
The crypto exchange said on Saturday it has launched a strategic review of its global assets and is preparing for the sale or reorganization of some businesses. A hearing on FTX’s so-called first-day motions is set for Tuesday morning before a U.S. bankruptcy judge, according to a separate court filing. read more
Reporting by Juby Babu in Bengaluru and Mike Spector in New York; Editing by Angus MacSwan and Daniel Wallis
Our Standards: The Thomson Reuters Trust Principles.
FTX businesses owe more than $3bn to largest creditors
Sam Bankman-Fried’s businesses owe more than $3bn to their largest creditors, according to court filings, as the cryptocurrency group’s huge bankruptcy process gets under way.
The crypto exchange FTX and linked companies founded by Bankman-Fried filed a list of their 50 largest creditors on Sunday, all of which are customers and owed more than $20mn, with two of them due more than $200mn. The companies’ total liabilities are estimated at more than $10bn, according to earlier filings, and it may have more than 1mn creditors.
Publication of the list as part of Chapter 11 bankruptcy proceedings in Delaware had been delayed as bankruptcy practitioners struggled to locate reliable records at FTX group, which collapsed earlier this month after a liquidity crisis and accusations it mishandled client funds.
John Ray III, the bankruptcy expert who has taken control of the business and who oversaw the liquidation of Enron, said in earlier filings he had never seen “such a complete failure of corporate controls and such a complete absence of trustworthy financial information”.
FTX said it may need to update the creditor list as “investigation[s] continue regarding amounts listed, including payments that may have been made but are not yet reflected on the [company’s] books and records”.
The filings show 10 clients are owed more than $100mn by FTX. The top 50 creditors, whose names are redacted in the filing, are all owed more than $20mn. FTX said in earlier court filings that disclosing the names of its large account holders would be competitively damaging.
FTX’s clients included large financial groups that traded cryptocurrencies, such as hedge funds. Unlike traditional exchanges, cryptocurrency trading venues also typically take custody of client funds. Customers who were unable to withdraw their funds before the firm halted payouts now face a long wait to recover their assets.
In other recent cryptocurrency bankruptcy cases involving Voyager Digital and Celsius Networks, a key legal question has been determining whether account holders are unsecured creditors or have a higher priority status in determining who gets recovery payments first. Another question likely to arise is whether account holders who withdrew their money just before the bankruptcy filing are subject to clawbacks.
The collapse of the exchange, which until this month was widely viewed as among the most reliable digital asset venues, has stoked fears that other firms could be at risk from their exposure to FTX and a crisis of confidence in the market.
Shares in Silvergate, a US bank known for its involvement in crypto, fell around 30 per cent last week. The bank has said it has “the liquidity and the capital ratios to support the volatility”.
Hedge fund Galois Capital earlier this month told customers it had “roughly half of our capital stuck on FTX”. Based on Galois’s assets under management as of June, that could amount to around $100mn.
In another filing on Saturday, FTX said the company had 330 workers around the world but was experiencing “extraordinary attrition”. It asked the court’s permission to continue paying remaining employees it said were critical to the bankruptcy case.
FTX disclosed in court papers that new CEO Ray is billing his time at $1,300 an hour and had been paid a $200k retainer fee. It has also retained three new executives to assist in the bankruptcy including a chief financial officer.
An initial court hearing is set for Tuesday morning in the federal bankruptcy court in Delaware in front of Judge John Dorsey.
Evergrande creditors fear imminent default as concerns shake sector
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SHANGHAI/SINGAPORE/HONG KONG -China Evergrande Group offshore bondholders are concerned that it is close to defaulting on debt payments and want more information and transparency from the cash-strapped property developer, their advisers said.
Evergrande, which could trigger one of China’s largest defaults as it wrestles with debts of more than $300 billion and whose troubles have already sent shockwaves across global markets, missed payments on dollar bonds, worth a combined $131 million, that were due on Sept. 23 and Sept. 29.
With Evergrande staying silent on dollar debt payments and prioritising onshore creditors, offshore investors have been left wondering if they will face large losses at the end of 30-day grace periods for last month’s coupons.
CHINESE MARKETS RETURN FROM BREAK TO MORE EVERGRANDE ANGST
A group of bondholders have enlisted investment bank Moelis & Co and law firm Kirkland & Ellis to advise them.
Offshore bondholders want to engage “constructively” with the company, but are concerned about lack of information from what was once China’s top-selling property developer, said Bert Grisel, a Hong Kong-based managing director at Moelis.
China Evergrande Group offshore bondholders are concerned that it is close to defaulting on debt payments and want more information and transparency from the cash-strapped property developer, their advisers said. Photographer: Kyle Lam/bloomberg (Kyle Lam/bloomberg / Getty Images)
“We all feel that an imminent default on the offshore bonds is or will occur in a short period of time,” Grisel said on a call with bondholders on Friday.
“Unfortunately, so far, we have had a couple of calls with the advisers,” but there had not been any “meaningful dialogue with the company or provision of information”, he said
Evergrande, which faces nearly $150 million in offshore payment obligations next week, did not respond to a Reuters request for comment.
Neil McDonald, a restructuring partner in the Hong Kong office of Kirkland & Ellis, said the bondholders would like more transparency, and hoped Evergrande would meet disclosure obligations under stock listing rules.
The offshore bondholders are also demanding more information about Evergrande’s plan to divest some businesses and how the proceeds would be used, the advisers said, adding that the creditors group they represent was growing.
EMPTY BUILDINGS IN CHINA’S PROVINCIAL CITIES TESTIFY TO EVERGRANDE DEBACLE
The two advisers said that, including the parties that have expressed an interest to be part of the group, they represent bondholders who currently hold $5 billion worth of Evergrande nominal offshore bonds.
Evergrande said last month it would sell a $1.5-billion stake it owns in Shengjing Bank Co Ltd. The bank, one of Evergrande’s main lenders, demanded cash from the sale go towards settling the developer’s debts with Shengjing.
Trading in Evergrande shares has been halted since Monday pending a major deal announcement. Trading in its Evergrande Property Services Group unit was also halted.
China’s state-backed Global Times said Hopson Development was to acquire a 51% stake in Evergrande Property for more than HK$40 billion ($5.1 billion), citing other media reports.
“Whilst we don’t want to overstate this, we are obviously at this point in time preparing contingency plans to ensure that there are no dissipation of assets,” McDonald said.
“And if there is such activity, we will be prepared to take steps to protect the rights and interests of U.S. creditors, and we really hope that that’s not necessary,” he added.
The advisers for offshore Evergrande bondholders had reached the developer on Sept. 16, but had not received any assurance from the developer, demanding more transparency.
SECTOR SLUMP
In another development, Evergrande dollar-bond trustee Citi has hired law firm Mayer Brown as counsel, a source familiar with the matter, who declined to be named due to the sensitivity of the matter, told Reuters earlier on Friday.
Citi and Mayer Brown declined to comment.
The possible collapse of one of China’s biggest borrowers has triggered worries about contagion risks in the world’s second-largest economy, with other debt-laden property firms hit by rating downgrades on looming defaults.
With few clues as to how local regulators propose to contain the contagion from Evergrande, the price of bonds and shares in Chinese property developers slumped again on Friday.
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“The potential lack of transparency and clarity are leaving investors more skittish and it will be very difficult for people to want to refinance any debt coming due in that particular sector,” said Cliff Corso, chief investment officer of Advisors Asset Management.
An index tracking China’s property sector dropped 1.53%, against a 1.31% blue-chip share rise.
The Shanghai Stock Exchange on Friday suspended trading of two bonds issued by smaller developer Fantasia Group China Co, with one dropping more than 50%, after controlling shareholder Fantasia Holdings Group missed the deadline on a $206 million international market debt payment on Monday.
Fantasia Holding said in a stock exchange filing on Friday that it had appointed Houlihan Lokey and Sidley Austin as its advisers to assess its capital structure, evaluate liquidity and explore solutions to ease its current liquidity issue.
Most of Evergrande and Fantasia’s bonds have already lost around 80% of their value.
Meanwhile, bonds issued by Greenland Holdings, which has built some of the world’s tallest residential towers including in Sydney, London, New York and Los Angeles, and Kaisa Group both took another beating on Friday.
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“Market participants are questioning if this may be a precursor for voluntary defaults by other developers with healthy short-term liquidity positions, but large unsustainable longer-term debt,” Chang Wei Liang, Credit & FX Strategist at DBS Bank, said in a note.