Update Regarding FTX Bankruptcy Proceedings: Denial of Motion for Relief from the Automatic Stay

April 18, 2023

On March 15, 2023, Sam Bankman-Fried filed a motion to lift the automatic stay in bankruptcy to allow FTX’s liability insurers to advance costs to Mr. Bankman-Fried to defend the criminal and civil cases against him (including Onusz v. West Realm Shires Inc., et al., Adv. Pro. No. 22-50513 (JTD)).

Along with the debtors and committee of unsecured creditors, E&C opposed the motion.  In particular, E&C asserted that any proceeds of the insurance policies should be maintained in FTX’s estate to pay customers.  Following a hearing on April 12, 2023, Judge Dorsey denied the motion without prejudice.  The Court held that it was Mr. Bankman-Fried’s burden to meet a three-pronged test to obtain the requested relief, and that he totally failed to present any evidence that: (1) he would be harmed by refusal to lift the stay (i.e., he has no other insurance or assets to pay his costs); (2) the Estate will not be burdened; and (3) he is likely to succeed  in the litigations against him (of which Judge Dorsey made a particular point of staying there was no evidence he would succeed in defending the cases).  Judge Dorsey further stated that Mr. Bankman-Fried can come back and renew his motion if he wants to present evidence.

To view the relevant filings in this update, please use the following links:

Order Denying Motion of Samuel Bankman-Fired for Relief from the Automatic Stay

 

This release is for informational purposes only and should not be construed as legal advice.