John Ray III: Who is the man taking over FTX?
John Ray III has taken over as Debtor’s CEO of FTX after founder, Sam Bankman-Fried stepped down from the role amid the cryptocurrency exchange’s collapse.
As Debtor’s CEO, John Ray III is delegated all corporate powers and authority under applicable law, including the power to appoint independent directors and commence Chapter 11 bankruptcy proceedings.
One of his first moves in the new role, was indeed filing for Chapter 11 bankruptcy, saying it is “an important step in developing plans to restructure the crypto exchange”.
Ray also announced top law firm Sullivan and Cromwell as advisors for restructuring FTX, and professional services firm Alvarez & Marsal would also play an advisory role in the process.
John Ray III Enron links?
Ray is a Chicago-based lawyer who’s been involved in cleaning up some of the worst corporate collapses in U.S. history. FTX just the latest disaster taken on by the giant of corporate restructuring.
The highest profile role previously undertaken by John Ray III, was chairman and president of Enron Creditors Recovery Corp.
Former American energy giant Enron became Enron Creditors Recovery Corp., after it filed the largest ever chapter 11 bankruptcy in U.S. history in 2001.
John Ray III was responsible for liquidating Enron’s operations and distributing assets to creditors, however in 2003 he also successfully led civil action against banks accused of conspiring with Enron officials to manipulate the company’s finances.
The banks included Royal Bank of Scotland, Deutsche Bank and Citigroup, with Enron Creditors Recovery Corp. negotiating settlement with all the accused institutions.
The action, led by Ray, resulted in some $7.2 billion being distributed to creditors.
“When Ray took over Enron, the litigation against the banks was stalled, most of the assets had yet to be sold, and a morass of competing creditor claims-about $1 trillion worth-had to be sorted out. Within a year, Ray and his team pared the claims down to $40 billion, closed the sale of CrossCountry Energy LLC (a utility in Oregon), and consolidated Enron’s disparate international holdings,” said Ben Hallam from The American Lawyer.
Other notable bankruptcy cases John Ray III has led involve Overseas Shipholding Group Inc., Nortel Networks Inc. and Residential Capital.
Worse than Enron
A week after taking control of FTX, bankruptcy documents submitted to a U.S. court By John Ray III revealed just how bad the situation is at the failed exchange.
Here’s part of Ray’s sworn declaration.
“Since my appointment, I have worked around the clock with teams of professionals at Alvarez & Marsal, Sullivan & Cromwell, Nardello & Co, Chainalysis, Kroll and a confidential cybersecurity firm, to secure the assets of the Debtors wherever located, to identify reliable books and records, to assemble the information necessary to provideto this Court, and to respond to numerous inquiries from multiple regulators and government authorities including the U.S. Commodity Futures Trading Commission (“CETC”), the U.S. Attomey’s Office for the Souther DistrictofNew York, the US. Securities and Exchange Commission (“SEC”), and the U.S. Congress, among others,” Ray said in the sworn declaration.
“I have over 40 years of legal and restructuring experience. I have been the Chief Restructuring Officer or Chief Executive Officer in several of the largest corporate failures in history. I have supervised situations involving allegations of criminal activity and malfeasance (Enron). I have supervised situations involving novel financial structures (Enron and Residential Capital) and cross-border asset recovery and maximization (Nortel and Overseas Shipholding).
“Nearly every situation in which I have been involved has been characterized by defects of some sort in internal controls, regulatory compliance, human resources and systems integrity.
“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here. From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially ‘compromised individuals, this situation is unprecedented.”
It’s likely FTX owes billions of dollars to up to one million creditors, while a legal expert to Asia Markets they expect the case could take “in excess of three of four years” to be finalised.