FTX bankruptcy judge denies request for independent examiner in the case

business-standard.com:

The judge presiding over the bankruptcy of cryptocurrency exchange FTX has denied a request by the U.S. bankruptcy trustee to appoint an independent examiner in the case.

The trustee, who serves as a government watchdog in Chapter 11 reorganizations, argued that the company's financial affairs and business operations, including allegations of unprecedented fraud leading to its collapse, should be reviewed by a disinterested person, not left to an internal investigation.

But Judge John Dorsey rejected the request on Wednesday. He agreed with FTX and its official committee of unsecured creditors that an examiner's work would be too costly and would duplicate investigations already under way by FTX's new leadership, the creditors committee and several federal agencies.

"There is no question that if an examiner is appointed, the cost of the examination, given the scope suggested by the trustee at the hearing, would be in the tens of millions of dollars and would likely exceed 100 million dollars," Dorsey said.

The judge noted that the goal of the bankruptcy is to return as much value as possible to FTX creditors and customers. Every dollar spent in these cases on administrative expense is a dollar less to creditors, he said.

Dorsey also indicated that he has confidence in John Ray III, who replaced FTX co-founder Sam Bankman-Fried as CEO on the same day the company sought bankruptcy protection in November.

There is no question that Mr. Ray is completely independent of prior management and the companies he was appointed to lead, Dorsey said, describing Ray as highly qualified and a consummate professional. The judge similarly expressed confidence in the independent directors appointed by Ray to oversee four silos of FTX