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