The judge presiding over the FTX bankruptcy case has denied the US Trustee’s request to appoint an independent examiner to the ongoing proceedings. The decision comes after Judge John Dorsey postponed the ruling last week, citing concerns that the examiner could cost creditors tens of millions of dollars.
The US trustee’s argument for an independent examiner was ultimately overturned by the authority of the court
In the last filing in the bankruptcy of FTX case file, Judge John Dorsey has denied the appointment of an independent examiner. Dorsey said the current team, led by FTX CEO John J. Ray III, is “highly qualified” to handle bankruptcy proceedings independently. The decision nullifies the US Trustee’s request to hire an independent examiner, which was said to have been mandated by Congress.
However, the judge presiding over the FTX bankruptcy case stressed that he “had no doubt that appointing an examiner would not be in the best interests of creditors.” According to estimates, current management claimed that the expenses of an independent examiner could reach between $90 million and $100 million. “Every dollar spent on filing fees in these cases is $1 less for creditors,” Dorsey said during the hearing, agreeing that an examiner could be too expensive.
Since December 1, 2022, an attorney for the US Trustee, a branch of the US Department of Justice (DOJ), has been seeking to appoint an examiner for the FTX case in the bankruptcy court of Delaware. During the case, a representative of the Receiver argued that the appointment of an independent examiner was mandated by Congress and was no longer within Dorsey’s authority.
The receiver’s argument was supported by a letter from four bipartisan US senators who insisted that an independent examiner be appointed. However, the Delaware bankruptcy judge’s decision emphasizes that his court’s authority has quashed the government’s request.
What do you think about the judge’s decision to deny the US Trustee’s request for an independent examiner in the FTX bankruptcy case? Let us know in the comments section.
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