News & Media
UPDATE REGARDING FTX BANKRUPTCY PROCEEDINGS: DENIAL OF MOTION TO APPOINT INDEPENDENT EXAMINER
February 24, 2023
On February 15, 2023, Judge John Dorsey of the United States Bankruptcy Court for the District of Delaware held a hearing in which he denied a motion filed by United States Trustee Andrew Vara in favor of appointing an independent examiner to investigate FTX.
During the February 15th hearing, Judge Dorsey concluded that appointing an examiner would become a burden on FTX debtors and creditors and would incur an unnecessary expense.
Vara, through his counsel, filed the Motion on December 1, 2022, and argued that an independent examiner would serve the best interests of both the debtors and the creditors and that an independent examiner “could—and should—investigate the substantial and serious allegations of fraud, dishonesty, incompetence, misconduct, and mismanagement by the Debtors, the circumstances surrounding the Debtors’ collapse, the apparent conversion of exchange customers’ property, and whether colorable claims and causes of action exist to remedy losses.” Thereafter a group of four US Senators, John Hickenlooper, Thom Tillis, Elizabeth Warren, and Cynthia Lummis, sent a letter to Judge Dorsey on January 9, 2023, arguing in favor of an independent examiner, stating that they believe it is “critical that a strong, objective, and disinterested examiner is appointed in this case to conduct a searching investigation of FTX, FTX US, and its related entities.”
In opposition, counsel for FTX argued that the potential investigation by an independent examiner would be “costly” and could “slow the progress of the case.” Counsel for FTX previously estimated the cost of an independent investigation by an examiner to be approximately $100 million. Upon consideration of both sides’ arguments, Judge Dorsey denied the Trustee’s motion.
To view the relevant filings in this update, please use the following links:
This release is for informational purposes only and should not be construed as legal advice.