Benzinga - Judge John Dorsey of the U.S. Bankruptcy Court for the District of Delaware denied a request on Feb. 15 for an independent examiner for FTX, citing additional expenses and unnecessary burden on the creditors and debtors.
According to the judge, if an examiner were appointed, the cost of the examination would be in the tens of millions of dollars and could potentially exceed $100 million, Cointelegraph reported.
Judge Dorsey concluded that such a cost would not be in the best interest of the creditors.
“Every dollar spent in these cases on administrative expenses is a dollar less to the creditors,” said Judge Dorsey.
The judge also mentioned the experience of CEO John Ray in taking over other companies in dire financial conditions and appointing four directors to oversee the silos that makeup FTX following the removal of the previous leadership, including former CEO Sam Bankman-Fried, who has been indicted in federal court.
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Judge Dorsey noted Ray was independent of prior management and the companies he was previously appointed to lead.
The motion for an independent examiner was made by U.S. Trustee Andrew Vara on Dec. 1, who argued such an examiner would be unquestionably in the interest of the debtor's creditors.
Vara also suggested an independent investigation could explore whether the software was allegedly used to conceal the misuse of FTX user funds, as well as the absence of proper record-keeping at the firm.
The bankruptcy proceedings for FTX have been ongoing since the firm filed for Chapter 11 in November 2022.
Recently, the debtors in the case filed subpoenas to FTX insiders, including Bankman-Fried, to turn over certain documents and information.
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