FTX debtor gets exclusivity extension as Robinhood stake fight continues

By Sarah Lizee

Olympia, Wash., June 5 – FTX Trading Ltd. debtor Emergent Fidelity Technologies Ltd. secured a 180-day extension of its exclusive periods to file and solicit votes on a Chapter 11 plan, according to an order filed Monday with the U.S. Bankruptcy Court for the District of Delaware.

The court extended the exclusive plan filing period through Nov. 30 and the exclusive solicitation period through Jan. 29, 2024, as requested by the debtor.

As previously reported, FTX said the Emergent debtor holds title to shares in Robinhood Markets, Inc. and proceeds thereof worth about $600 million.

Emergent purchased the shares in early 2022 with funds that former chief executive officer Sam Bankman-Fried and Zixiao “Gary” Wang had purportedly borrowed from Alameda Research Ltd.

The shares were held in the Emergent debtor’s name with a brokerage in New York until January 2023, when they were seized by the Department of Justice.

The shares are potentially subject to forfeiture to the DOJ if Bankman-Fried is convicted of specified crimes and the shares are found to be the proceeds of those crimes.

One of Bankman-Fried’s alleged crimes is causing Alameda to systematically misappropriate FTX customers’ funds. Caroline Ellison, Alameda’s co-CEO, has confessed to this crime.

Claims to the shares have been made by the DOJ, for the benefit of Bankman-Fried’s victims, Alameda, for the benefit of its creditors, BlockFi, for the benefit of its creditors, Bankman-Fried himself, Chapter 15 debtor FTX Digital Markets Ltd. and Yonatan Ben Shimon, an FTX customer who alleges that his deposits may have been misappropriated by Alameda and used to purchase the shares.

There may be many other FTX customers who could assert claims like those Shimon has asserted, based on a good-faith belief that their own deposits were misappropriated in the same way, FTX said in the motion.

“The Emergent Chapter 11 case has required coordination with many constituencies not only before this court, but in several other Chapter 11 and foreign insolvency proceedings as well,” FTX said in the motion.

“The pace of the Emergent debtor’s progress is inevitably impacted by the need to coordinate with, and be responsive to, governmental authorities.

“The Emergent Chapter 11 case involves novel and complex legal issues, some of which may need to be resolved prior to or in connection with a chapter 11 plan.”

FTX has headquarters in the Bahamas. The company filed Chapter 11 bankruptcy on Nov. 11, 2022 under case number 22-11068.

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