Thanks, this is a really great summary of the principles.
I definitely agree that it will depend on further factual development. But I think the facts that are out imply that the insolvency period could go back a very long way. It sounds like the user deposits was intermingled with FTX and Alameda operating capital from the very beginning, and the accounting practices were such that they wouldn’t necessarily have known their overall position.
Do you happen to know whether the bankruptcy court just looks at when the executives knew (or negligently failed to find out) that the company was insolvent? It seems kind of weird to expect the court to decide the true value of all the assets at each point in time.
Thanks! It really should have occurred to me to just look this up and read the statute, it definitely makes things a lot clearer.
I’ll be interested to see what value gets ascribed to the various cryptocurrency assets.
Let’s say I’m running some business and it’s maybe going under. On behalf of the business, I create 101 finger paintings, sell one to my friend’s uncle’s golf buddy for $10,000, and book the rest as $1m in fine art assets. With my balance sheet shored up, I go on trading, but eventually things don’t work out and I file for Chapter 11.
Does the court have to accept the value I put on the paintings at the time, and regard me as solvent for that period? After all, sure, eventually it turned out I couldn’t sell the paintings. But that could just be because by then my name was in the news and that tanked the market for my art.