FTX’s new CEO helped bolster Enron victims’ recovery By Reuters

By Dietrich Knauth and Brendan Pierson

(Reuters) – FTX Buying and selling’s new CEO John J. Ray III, a lawyer tapped to guide the collapsed crypto trade’s restructuring, beforehand oversaw the $23 billion chapter of vitality agency Enron Corp and has a fame for enhancing creditor recoveries.

Ray took over from founder Sam Bankman-Fried as FTX’s chief government after a disastrous week for the corporate that began with a shortly deserted buyout effort from rival trade Binance Inc and culminated in a Chapter 11 submitting in Delaware on Friday.

In Ray’s first few days as boss, the corporate has been hit by regulatory probes in varied jurisdictions and studies of a hack of FTX apps and $1 billion of lacking buyer funds.

Ray stated on Saturday the corporate was working with regulation enforcement and regulators to mitigate the issues and making “each effort” to safe belongings.

FTX has but to offer the Delaware chapter court docket with any of the knowledge that’s customary within the first few days after a chapter submitting, an indication that Ray and the corporate’s legal professionals are nonetheless making an attempt to know its operations and previous transactions following its “crash touchdown”, based on Jared Elias, a professor of chapter regulation at Harvard College.

Ray, 63, on Monday declined to touch upon his preliminary priorities as FTX’s CEO. When requested about latest work, he pointed to his function within the chapter of mortgage lender Residential Capital, by which he helped get well $1.8 billion for collectors by suing mortgage originators.

Ray isn’t any stranger to high-profile restructurings and is maybe greatest identified for his work on Enron, which filed for chapter in 2001 amid revelations of widespread accounting fraud and corruption.

Serving as Enron’s CEO all through its years-long chapter, Ray’s work resulted in main settlements with banks accused of serving to Enron deceive buyers, together with a $1.66 billion settlement with Citigroup (NYSE:) in 2008.

Mark Lichtenstein, an legal professional who labored on Enron’s chapter, noticed many parallels between FTX and that case.

“You’ve received such a meltdown, just like Enron, kind of a run on the financial institution,” Lichtenstein stated. “He had the calm and the gravitas to step right into a firestorm.”

Attorneys who labored on Enron’s chapter, one of many largest in historical past, stated it resulted in a better-than-expected final result for collectors, due to Ray’s doggedness in clawing again cash based mostly on claims of fraud, accounting malpractice and preferential payouts.

“I’ve seen him go face to face with a few of the most outstanding individuals within the business,” stated John Delnero, an legal professional who represented the Enron entity charged with recovering cash for collectors. “John doesn’t blink.”

Ray has additionally labored as a restructuring government or overseen litigation to profit collectors within the bankruptcies of telecommunications firm Nortel Networks, tanker operator Abroad Shipholding Group, Apple (NASDAQ:) elements provider GT Applied sciences, underwear maker Fruit of the Loom and digicam firm Polaroid Company.