Restructuring lawyer John J. Ray III is facing a long road to repairing the damage done by the collapse of FTX—but there is much still to be saved.
Key Details
- Ray is famous in the business world for helping to manage several of the most high-profile restructurings including Fruit of the Loom and Enron.
- It is thus significant that he is calling FTX—which collapsed following a liquidity crisis on November 8 and declared bankruptcy, one of the largest failures of a financial institution he has ever seen.
- He is facing a potential decade-long battle to untangle the web of chaos created by Sam Bankman-Fried, but nobody is in a better position to do the job than he is.
- One key is to trace all assets and either recapture them or find a way to rebuild them and sell them to capture as much value as he can.
Why it’s News
Ray and his team took over FTX on November 11 and they have been busy figuring out working seven days a week to gather a full sense of the scope of FTX’s failure. The full extent so far isn’t clear as billions of dollars are missing, potentially stolen during the collapse, and billions in assets are tied up in The Bahamas and various real estate properties.
“Ray’s approach is to immerse himself in the details and to move fast with teams created specifically for the blowup he’s focused on. At FTX, he quickly divided the operations into four different buckets, or silos, each of which is now run by an independent director of directors with an illustrious pedigree, some of whom Ray appears to have worked with at previous assignments,” says Forbes.
The bankruptcy team has a large job in attempting to trace all of the company’s assets and find a way to rebuild them or resell them to recoup the company’s losses. They will be benefited from assistance from FTX’s subsidiary companies and partners, who reportedly have kept solvent records and managed finances responsibly.
The team already made its first appearance in the Delaware Bankruptcy Court on Tuesday to announce initial findings. Its next hearing is in January.
“Unlike many turnaround CEOs and turnaround board members who juggle multiple engagements at the same time, Ray is known for focusing on one big mess at a time that typically takes years to sort through. At FTX, Ray will need to first find the assets in order to create a viable picture of the company’s balance sheet, and then figure out how to get money back for the company’s creditors, a process that’s likely to involve lots of finger-pointing and litigation,” says Forbes.
