Bankrupt FTX Seeks Court Approval to Liquidate Solvent Dubai Subsidiary

According to court documents, FTX Dubai held approximately $4.5 million in multiple accounts.

Bankrupt FTX wants the court to remove its Dubai subsidiary from the entity of the U.S. bankruptcy proceedings, according to an Aug. 2 court filing.

FTX revealed that its Dubai subsidiary was licensed as a virtual asset service provider in July last year, but did not conduct any business in the United Arab Emirates (UAE). Additionally, the FTX Dubai license expired last month after it was first suspended following the collapse of FTX last November.

FTX has since advised that, since there is no "reasonable possibility of resuming operations", it is preferable to liquidate the Dubai subsidiary under UAE law. It added that FTX Dubai's balance sheet is solvent.

If the request is approved, FTX Dubai will be removed from the list of 102 FTX-affiliated entities that filed for bankruptcy in the US last November. However, the insolvency exchange does not want the removal to affect orders placed while the subsidiary is still in bankruptcy proceedings.

The court has until August 23 to hear the case.

FTX Dubai holds $4.5 million

According to court documents, FTX Dubai holds approximately $4.5 million in various accounts, of which $4 million is currently restricted by the Dubai Virtual Assets Regulatory Authority (A) as security for a license.

A confirmed that, in the context of the liquidation of the Dubai subsidiary, cash restrictions will be lifted in accordance with local laws, FTX said.

It added that the liquidation would "allow for the timely distribution of positive cash balances following payment of all outstanding liabilities and liquidation of all assets."

According to court documents, FTX Dubai has approximately $600,000 in outstanding liabilities, including employee payments, bank fees and other intercompany payments.

At the same time, the liquidators of the bankrupt company submitted a preliminary restructuring proposal, recommending that the exchange be restarted. However, this was opposed by unsecured creditors because the plan ignored their advice.