FTX’s Freefall Into Bankruptcy Shows Why Case File Is Empty
The collapse of Sam Bankman-Fried's crypto empire has been chaotic, fast and full of unknowns. The world should soon get some answers via a Delaware federal court.
FTX is what's known in the industry as a “free fall” bankruptcy. More than 130 related companies sought court protection at the end of last week without filing any of the usual court motions or explanatory documents seen in a big US insolvency case. Two days later, the companies' main court docket contains only a 23-page fill-in-the-blank petition. In nearly every other multi-billion dollar Chapter 11 case in recent years, lawyers quickly file a smattering of routine requests designed to stabilize operations.
In a statement, the company's new chief executive officer -- a man who helped oversee the unwinding of Enron Corp. -- told customers that details about the bankruptcy would hit the court docket “over the coming days.”
“It's not like a normal filing where you're lining up papers literally for weeks,” said Eric Snyder, chair of the bankruptcy department at law firm Wilk Auslander, which isn't part of the case. “Within 24, 48 hours this was on the ropes and done.”
Free Fall
Typical paperwork filed in the immediate aftermath of a bankruptcy include a detailed narrative of why the company sought court protection, what kind of judicial help it needs immediately and a general outline of what the company hopes to accomplish in bankruptcy.
A judge handles those immediate requests at a company's first court hearing, which is typically held within a few days of the Chapter 11 petition. As of Sunday afternoon in Delaware, FTX hadn't said when it would appear before US Bankruptcy Judge John Dorsey, who has been assigned to the case.
When FTX does get its first hearing,
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