The bankrupt cryptocurrency exchange FTX is attracting prospective buyers interested in acquiring four of the company's sub-businesses, with over 100 would-be purchasers expressing interest so far.
An update from FTX's proposed investment banker, Perella Weinberg Partners (PWP), filed with the bankruptcy court on Jan. 8 stated that "approximately 117 parties, including various strategic counterparties globally, have expressed interest to the debtors in a potential purchase of one or more of the businesses."
While none of the 117 inquiries have resulted in a firm offer to date, 59 prospective buyers have entered into confidentiality agreements that allow them to access data rooms and a marketing presentation prepared by management that includes information to facilitate due diligence, such as details about the business unit's operations, finances, and technology.
Expressions of interest
The prospective buyers also have to provide the current management of FTX with preliminary documents to demonstrate their interest before the confidentiality agreements can be signed in advance of the presentations.
The four FTX sub-companies are Embed, LedgerX, FTX Japan, and FTX Europe. Here's a look at the degree of interest to date in each of those entities per the filing:
- Embed: 50 parties have expressed interest and 31 have signed confidentiality agreements for the stock clearing platform, and 42 parties have spoken with PWP about the business.
- LedgerX: 56 parties have expressed interest in the regulated trading platform and 32 have signed confidentiality agreements, while 42 parties have spoken with PWP.
- FTX Japan: 41 parties have expressed interest and 25 have signed confidentiality agreements, while 31 parties have spoken with PWP.
- FTX Europe: 40 parties have expressed interest and 23 have signed confidentiality agreements, while 33 parties have spoken with PWP.
The filing by PWP outlined a proposed bidding process for these FTX business units to be sold via auction. The bidding process would consider:
- The potential value of the businesses;
- Uncertainty about whether the potential value of the businesses could be preserved for the duration of Chapter 11 bankruptcy cases;
- The costs of supporting the businesses; the relative independence of these business units from the rest of FTX's operations;
- The value of competitive bidding to determine the market value and significant interest from potential buyers; and
- Other regulatory and commercial pressures to separate certain FTX sub-units from the numerous ongoing Chapter 11 bankruptcy cases.
The bankruptcy court will need to approve a motion concerning the proposed procedures before FTX assets can be sold to potential buyers. In the filing, PWP informed the court that FTX hasn't yet made any decisions about the sale of its businesses and that any future sales would be subject to the future approval of both the corporation and the court.
Potential future sales of FTX's sub-businesses are one of the primary means by which the firm's many creditors can recover some of their assets — although a full recovery remains unlikely given the scale of FTX's collapse. There are potentially more than one million creditors who invested assets into FTX.
Current FTX CEO John J. Ray III testified before House Financial Services Committee in December that most shouldn't hold out hope for a full recovery of their assets, telling lawmakers that, "We will never get all these assets back."