US Government Presses for Independent Examiner in FTX Bankruptcy Case – The U.S. Trustee’s request for an unbiased investigator in the FTX bankruptcy case was denied by a U.S. bankruptcy court judge. As a result, the government is now appealing this decision and the case has been forwarded to the U.S. Third Circuit Court of Appeals. Chief Judge Colm F. Connolly has acknowledged that he is obliged to comply with the Trustee’s request. The U.S. government, represented by the Department of Justice-appointed U.S.
Trustee, is pushing for an independent examiner to be assigned to the FTX bankruptcy proceedings. In December, the U.S. Trustee’s attorney submitted a written letter to the court emphasizing the need for an impartial examiner. Additionally, a bipartisan group of U.S. senators has also emphasized the importance of appointing an independent investigator for the FTX case.
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The letter requesting an investigation was signed by a group of U.S. senators, namely Cynthia Lummis (R-WY), Thom Tillis (R-NC), Elizabeth Warren (D-MA), and John Hickenlooper (D-CO). However, the FTX management team has estimated that appointing a separate examiner could result in expenses of approximately $100 million for the estate. In early February 2023, Judge John Dorsey postponed his decision on appointing an examiner, and a week later, he rejected the U.S. Trustee’s request.
In the court filing registered on May 30, chief judge Connolly said “I have no choice but to grant the Trustee’s motion” after appellant Andrew Vara filed the motion. “No one contests that the Trustee requested an examiner here or that the debtor’s fixed, liquidated, unsecured debts, other than debts for goods, services, or taxes, or owing to an insider, exceed $5 million,” the judge stated.
Judge Connolly added: “The only issue is whether, given those facts, the bankruptcy court could lawfully reject the Trustee’s request for the appointment of an examiner.” Judge Connolly has ruled that the court will issue an order based on the memorandum opinion. Additionally, he mentioned that the assessment of the appeal’s validity will be put on hold until the Third Circuit makes a decision. Approximately 200 days have passed since Sam Bankman-Fried’s FTX filed for Chapter 11 bankruptcy protection in November 2022.