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FTX Trading has examiner appointed to Chapter 11 bankruptcy case
By Sarah Lizee
Olympia, Wash., Feb. 28 – FTX Trading Ltd.’s Chapter 11 bankruptcy case had an independent examiner appointed to its case, according to a notice filed Tuesday with U.S. Bankruptcy Court for the District of Delaware.
Robert J. Cleary will serve as examiner.
As a reminder, shortly after FTX filed bankruptcy, Regions 3 and 9 U.S. trustee Andrew R. Vara filed a motion seeking an examiner to investigate the company’s collapse.
The motion brought objections from FTX and the official committee of unsecured creditors, which argued that appointment of an examiner would not be appropriate in these cases.
Bankruptcy court judge John T. Dorsey said he agreed with the objectors and said appointing an examiner would likely cost more than $100 million, given the scope of the investigation that the U.S. trustee had requested. He added that creditors would be required to bear the burden of that cost.
Vara later filed an appeal that made its way to the Third Circuit. Earlier this month, the Third Circuit overturned the bankruptcy court’s ruling.
“The issue before us is one of statutory interpretation: whether the plain text of section 1104(c)(2) requires a bankruptcy court to appoint an examiner, if requested by the U.S. trustee or a party in interest, and if ‘the debtor’s total fixed, liquidated, unsecured debt’ exceeds $5 million,” the appeals court said in court documents.
“We hold that it does. The bankruptcy court erred in denying the U.S. trustee’s motion to appoint an examiner to investigate FTX Group.”
FTX has headquarters in the Bahamas and filed Chapter 11 bankruptcy on Nov. 11, 2022 under case number 22-11068.
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