FTX Case: US Trustee Proposes $100M Examiner, Creditors Object

• Lawyers representing FTX have claimed that an outsourced examiner would cost the company more than $100 million without benefiting equity holders or creditors.
• The Jan. 25 objection argument comes after the recent motion by US Trustee Andrew Vara, who was tasked to handle FTX’s bankruptcy.
• The official committee of unsecured creditors has also filed an objection motion against Vara’s proposal of appointing an examiner.

FTX, a crypto exchange that had a market value of $32 billion, has recently gone through a liquidity crisis. In response, US Trustee Andrew Vara proposed that an independent examiner should be appointed to investigate the matter. Lawyers representing FTX have argued against this motion, claiming that it would cost the company more than $100 million without benefiting equity holders or creditors. The Jan. 25 objection argument also cites the fact that the investigations could be done by the committee of creditors, regulatory authorities, law enforcement agencies, congress, and even the new FTX CEO, John Ray.

The official committee of unsecured creditors has also filed an objection motion against Vara’s proposal of appointing an examiner. The creditors argued that the results of the investigation would not attend to the needs of the creditors, which is locating and recovering the assets of the defunct FTX exchange estate.

A letter was also submitted by four senators expressing their concern and asking for an independent examiner. This has raised questions whether these senators will do more to support the appointment of an examiner. Meanwhile, several states have also entered the FTX case, and it is yet to be seen whether they will lend their support to the proposal. The SEC had requested the appointment of an independent examiner in the case of Enron, and it remains to be seen if the same will be done here.

Thus, the situation is still unclear and it remains to be seen whether the FTX case will reach a resolution soon.