New FTX CEO announces 'ordinary course payment' to employees and contractors

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On Wednesday, November 28, the bankrupt crypto company FTX announced that it would resume 'ordinary course payments' of salary and benefits to employees worldwide and certain non-US contractors. John J. Ray III, the new CEO of FTX, made the announcement. In an official statement, he said,

"With the Court's approval of our First Day motions and the work being done on global cash management, I am pleased that the FTX group is resuming ordinary course cash payments of salaries and benefits to our remaining employees around the world. FTX also is making cash payments to selected non-U.S. vendors and service providers where necessary to preserve business operations…We recognize the hardship imposed by the temporary interruption in these payments and thank all of our valuable employees and partners for their support."

The announcement comes as the insolvency professional prepares to assist FTX and its estimated 101 affiliated companies (FTX Debtors) in navigating the United States Bankruptcy Court in Delaware. The announcement has no impact on any FTX.US employees or businesses. Cash payments are also permitted, subject to any limits imposed on or after the bankruptcy filing date.

There are, however, a few jurisdictions that will be excluded. Employees or contractors of the FTX Debtors are not eligible for relief in The Bahamas, nor are employees or contractors of FTX Digital Markets Ltd. ("FTXDM Bahamas"). FTXDM Bahamas is the subject of a separate liquidation proceeding in The Bahamas and is not included in or protected by the United States' chapter 11 cases. Similarly, because FTX Australia Pty Limited and FTX Express Pty Ltd were separate entities, they were not included in the U.S. Chapter 11.

The announcement comes about 10 days after FTX debtors filed a motion in the Delaware Bankruptcy Court on November 19. The filing asked to pay prepetition compensation and benefits to employees and contractors. It excluded payments to former FTX CEO and founder Sam Bankman-Fried, as well as Gary Wang, Nishad Singh, and Caroline Ellison. According to a document filed as part of its Chapter 11 bankruptcy proceedings, FTX Trading alone owes $3.1 billion to its top 50 creditors. Ray has attempted to distance FTX from its founder since taking over. He went so far as to publicly state that Bankman-Fried has no ongoing role with the company.

Shashank is founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist.