US government set to sell two FTX business jets

The US government has reached an agreement with Bahamian operator Island Air Capital about repossessing an Embraer Legacy agreement owned by FTX the failed cryptocurrency exchange.

FTX bought two aircraft – the Legacy and a Bombardier Global aircraft. The Legacy has been in the Bahamas since the collapse of FTX.

Island Air Capital, a Bahamian air charter company, had argued in bankruptcy filings that it owned the aircraft. It has now agreed to the fly the aircraft to the US.

“Under the primary terms of the Stipulation and Order, IAC agrees to withdraw litigation previously filed against the FTX Debtors, Stipulation and Order,” said Damian Williams, a US attorney in a court filing. In return the US government has agreed to pay costs for flying the aircraft to the US and for maintenance on the aircraft before the collapse of FTX.

The government is now asking for court authorisation to sell the Legacy.

Paul Aranha, the owner of Island Air Capital, had argued that Island Air Capital owned both the Legacy and the Bombardier Global. In a filing, Island Air Capital had said that it owned the aircraft using financing from FTX.  “The aircraft loan was in the form of an unsecured, no-interest loan agreed to in a handshake deal between FTX’s then-CEO Sam Bankman-Fried and IAC’s beneficial owner, Mr. Aranha,” said the operator in a court filing.  

In the filing Island Air Charter said it provided charter flights, aircraft upgrades and other services worth more that $15m to FTX and its founder Sam Bankman-Fried. Island Air Charter said that FTX did not wish to own the aircraft and agreed to finance two more aircraft for them.

The Bombardier Global was bought in March 2022 and the Legacy in August 2022. Both aircraft were being fitted with new interiors and connectivity when FTX filed for bankruptcy.