U.S. Court Asked to Reverse Decision to Not Appoint Independent Examiner in FTX Bankruptcy
A Delaware bankruptcy court judge had previously denied a motion to appoint a neutral examiner to avoid a lengthy and costly investigation that would slow the progress of the bankruptcy proceedings.
A Delaware bankruptcy court must reverse a previous order denying the appointment of an independent examiner in the FTX bankruptcy case, the U.S. Trustee, a branch of the Department of Justice (DOJ), said in a court filing from Wednesday.
In the filing, the Trustee says the bankruptcy court "committed legal error" in its February decision to oppose the appointment request in a case where the criteria for requiring such an examiner are met – including the condition that the bankrupt estate has over $5 million in "qualifying liabilities."
In February, Judge John Dorsey of the Bankruptcy Court of Delaware sided with the FTX estate, which argued an investigation would cost around $100 million and "slow the progress of these cases."
Although parties to the FTX case have complained about the "alleged" costs associated with appointing an examiner, for "both legal and practical purposes, any costs associated with appointing an examiner do not justify departure from the statutory requirement to appoint an examiner where, as here, the statutory criteria are met," DOJ Trustee Andrew R. Vara said in the filing.
The FTX crypto enterprise filed for bankruptcy in November, shocking the crypto industry, with its founder Sam Bankman-Fried facing criminal charges in the U.S.
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