• U.S. Trustee Andrew Vara’s legal team has filed an appeal against a federal judge’s denial of a motion appointing an independent examiner in FTX’s bankruptcy case.
• Judge John Dorsey said the costs of an examiner would be too high and not in the best interest of creditors, and called the letter from four senators “inappropriate ex parte communication”.
• FTX debtors argue that the phrase “as is appropriate” should also be interpreted as “if it is appropriate”.

U.S. Trustee Appeals Judge’s Ruling

The legal team for U.S. Trustee Andrew Vara petitioned to have the U.S. District Court consider an appeal for a ruling on an independent examiner in FTX’s bankruptcy case. The appeal was filed against a February ruling from Judge John Dorsey, who denied a motion to appoint an examiner citing excessive costs and lack of benefit to creditors.

Senators’ Letter Dismissed

Judge Dorsey dismissed a letter sent by four senators calling for greater transparency by appointing an independent examiner, saying it was “inappropriate ex parte communication” that he would not consider in his decision-making process.

FTX Bankruptcy Proceedings

FTX filed for Chapter 11 protection in November 2020 and since then its criminal case has been focused on former CEO Sam Bankman-Fried’s bail conditions — prosecutors have been seeking to limit or remove his ability to contact current and former FTX and Alameda employees while awaiting trial in October 2021.

Debtors’ Argument

FTX debtors are arguing that, according to the applicable section of law which states that “the court shall order the appointment of an examiner … as is appropriate”, “as is appropriate” should also be interpreted as “if it is appropriate”.

Conclusion

It remains unclear how this appeal will affect future proceedings, but both parties are eagerly awaiting further developments as the case progresses towards trial later this year