US Government Challenges Denial of Independent Examiner in FTX Bankruptcy Proceedings
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The U.S. bankruptcy court judge recently rejected the request to appoint an independent investigator for the FTX bankruptcy case. However, the government is not satisfied with this decision and has decided to appeal it. They have taken the case to a higher court known as the U.S. Third Circuit Court of Appeals.
🚨 US District Judge sends matter of #FTX independent examiner to appellate court #Bitcoin pic.twitter.com/4j58hH7LXz
— ⚡ Mr. Crypto Giants🐋 (@CryptoGiants_) May 30, 2023
Chief Judge Colm F. Connolly has acknowledged the appeal and stated that he is obligated to honor the U.S. Trustee’s request. As a result, the higher court will now review and consider the case in more detail.
After acknowledging the appeal and forwarding the case to the higher court, the next step would be for the U.S. Third Circuit Court of Appeals to review and consider the case in more detail. The appellate court will carefully examine the arguments presented by both the government and other parties involved in the FTX bankruptcy case.
The higher court will make a decision based on their evaluation of the case. They may uphold the bankruptcy court’s rejection of appointing an independent investigator, or they may overturn the decision and order the appointment.
Their ruling will provide a final resolution on whether an independent examination will be conducted in the FTX bankruptcy case.
U.S. Government and Senators Advocate for Independent Examiner in FTX Bankruptcy Case
As mentioned previously, the U.S. government, represented by the U.S. Trustee appointed by the Department of Justice for the FTX bankruptcy case, has expressed its desire to have an independent investigator assigned to oversee the proceedings. They believe that having an impartial investigator overseeing the case is important.
It is also worth mentioning that many senators, including Cynthia Lummis, Thom Tillis, Elizabeth Warren, and John Hickenlooper, also support the idea of an independent investigation. Their support adds weight to the argument for an independent examination, highlighting the significance of ensuring fairness and transparency in the bankruptcy process.
However, the FTX team estimates that hiring a separate examiner will likely cost around $100 million. In February 2023, Judge John Dorsey decided to postpone his decision on appointing an examiner, and later he denied the U.S. Trustee’s request.
Chief Judge Connolly Grants U.S. Trustee’s Motion for Examiner in FTX Bankruptcy Case
In a court filing on May 30, Chief Judge Connolly stated that he was obliged to grant the motion of the U.S. Trustee after appellant Andrew Vara filed a motion. The judge clarified that there was no disagreement regarding the Trustee’s request for an examiner, as the debtor’s debts exceeded $5 million, meeting the necessary conditions. The only question at hand was whether the bankruptcy court had the authority to reject the Trustee’s request.
Judge Connolly also mentioned that the court would issue an order based on this opinion, and the evaluation of the appeal’s merits would be put on hold until the Third Circuit makes a ruling. FTX filed for Chapter 11 bankruptcy protection in November 2022, and it has been approximately 200 days since then.
