New FTX CEO Helps Accelerate Recovery of Enron Victims
© Reuters. FILE PHOTO: The FTX logo is seen at the entrance of the FTX Arena in Miami, Florida, U.S., November 12, 2022. REUTERS/Marco Bello/File Photo
By Dietrich Knauth and Brendan Pierson
(Reuters) – The new CEO of FTX Trading, John J. Ray III, an attorney selected to lead the restructuring of the collapsed crypto exchange, previously oversaw the bankruptcy. $23 billion of energy company Enron Corp and has a reputation for promoting debt recovery for creditors.
Ray took over as CEO of FTX from founder Sam Bankman-Fried after a disastrous week for the company that began with a quickly abandoned acquisition attempt from rival exchange Binance Inc and culminated in Chapter 11 filings in Delaware on Friday.
During Ray’s first few days as boss, the company was hit by regulatory investigations in various jurisdictions and reports of the FTX app being hacked and losing 1 billion dollars of customer money.
Ray said on Saturday the company was working with law enforcement and regulators to minimize the problems and make “every effort” to secure the assets.
FTX has yet to provide the Delaware bankruptcy court with any of its customary information in the first few days after filing for bankruptcy, a sign that Ray and the company’s attorneys are still trying to understand the circumstances. past activities and transactions after the “emergency landing”. “, according to Jared Elias, a professor of bankruptcy law at Harvard University.
Ray, 63, on Monday declined to comment on his early priorities as FTX CEO. When asked about his recent work, he pointed to his role in the bankruptcy of mortgage lender Residential Capital, in which he helped recover $1.8 billion for homeowners. debt by suing the mortgage originators.
Ray is no stranger to high-profile restructurings and is perhaps best known for his work at Enron, which filed for bankruptcy in 2001 amid accounting fraud and rampant corruption.
As Enron’s CEO during many years of bankruptcy, Ray’s work led to major settlements with banks that allegedly helped Enron deceive investors, including a valuation settlement. 1.66 billion dollars with Citigroup (NYSE:) in 2008.
Mark Lichtenstein, an attorney who worked on the bankruptcy of Enron, saw many similarities between FTX and that case.
“You’ve got a crisis like that, similar to Enron, like a run on the bank,” Lichtenstein said. “He has the calm and seriousness to walk into a firestorm.”
Attorneys who worked on Enron’s bankruptcy, one of the largest in history, said the bankruptcy delivered a better-than-expected outcome for creditors, thanks to Ray’s persistence. in reclaiming money based on allegations of fraud, accounting malpractice and favor payments.
“I’ve seen him go head-to-head with some of the most famous people in the industry,” said John Delnero, an attorney representing the Enron organization responsible for collecting money for creditors. “John didn’t blink.”
Ray has also served as an executive restructuring or overseeing a lawsuit to benefit creditors in the bankruptcy of telecommunications company Nortel Networks, the operator of the tanker Overseas Shipholding Group, the supplier parts supplier Apple (NASDAQ: GT Technologies), lingerie maker Fruit of the Loom, and camera company Polaroid Corporation.