FTX Trading asks Court to enforce “worldwide automatic stay” under Bankruptcy Code
About a week after FTX and a number of its subsidiaries filed for bankruptcy in the United States, the company has moved for an order for a “worldwide automatic stay”.
The relevant documents were submitted on November 17, 2022 at the Delaware Bankruptcy Court.
FTX Trading Ltd. and its affiliated debtors and debtors-in-possession seek the entry of an order enforcing and restating the worldwide automatic stay, ipso facto and antidiscrimination provisions under the Bankruptcy Code.
FTX says that it has many foreign creditors, contract counterparties and other parties-in-interest in countries who may not be well versed in the protections and restrictions of the Bankruptcy Code. Some of these creditors and parties-in-interest do not transact business on a regular basis with companies that have filed for chapter 11.
These creditors and parties-in-interest may be unfamiliar with the operation of the worldwide automatic stay and other provisions of the Bankruptcy Code.
According to FTX:
“Upon the commencement of these Chapter 11 Cases, non-U.S. counterparties to certain leases and executory contracts could attempt to terminate such leases or contracts, including pursuant to ipso facto provisions in contravention of sections 362 and 365 of the Bankruptcy Code.
Similarly, governmental units outside of the United States may, in violation of section 525 of the Bankruptcy Code, deny, suspend, terminate, or otherwise place conditions upon certain licenses, permits, charters, franchises, or other similar grants held by a Debtor that is required for the Debtors’ ongoing business operations”.
FTX says that such circumstances warrant an order apprising all parties—especially non-U.S. governmental units, creditors and vendors—of sections 362, 365(e)(1), 525 and 541 of the Bankruptcy Code and the protections provided thereby.
To avoid unnecessary actions, and to provide notice to parties unfamiliar with the Bankruptcy Code of the scope and effect of the section 362 worldwide automatic stay, the section 365(e)(1) and 541(c) prohibition against enforcement of ipso facto clauses and the section 525 antidiscrimination provision, the Debtors request entry of the proposed Order restating those provisions. To that end, the Debtors submit that service of the Notice in appropriate circumstances will advance the efficient administration of these Chapter 11 Cases.
According to FTX, the granting of the relief requested will help ensure that (a) the non-debtor parties to unexpired leases and executory contracts with the Debtors will continue to perform and will not unilaterally terminate their contracts, (b) creditors do not seize the Debtors’ assets, impose liens or take any other action in violation of the worldwide automatic stay and (c) foreign governmental authorities do not deny, revoke or suspend any licenses or permits solely because the Debtors are in chapter 11.
On November 11, 2022 and, with respect to Debtor West Realm Shires Inc., on November 14, 2022, each of the Debtors filed with the Court a voluntary petition for relief under the Bankruptcy Code. The Debtors continue to operate their businesses and manage their properties as debtors-in-possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code.
On November 14, 2022, the Debtors filed a motion with the Court pursuant to rule 1015 of the Federal Rules of Bankruptcy Procedure seeking joint administration of the Debtors’ cases. No creditors’ committee, trustee or examiner has been appointed in these Chapter 11 Cases.