In Re FTX Trading, oral argument in US Trustee appeal of non-appointment of an Examiner, Nov. 2023

For news about this oral argument to the US Court of Appeals for the Third Circuit, see https://reorg.com/ftx-examiner-appointment-appeal/.

Third Circuit Hears Argument in FTX Examiner Appointment Appeal; Parties Spar Over Whether Statute Is Mandatory, Sullivan & Cromwell Potential Conflicts of Interest Wed 11/08/2023 18:48 PM

A three-judge panel of the U.S. Court of Appeals for the Third Circuit heard oral argument today in the appeal in the FTX Group cases by the Office of the U.S. Trustee of a bankruptcy court order denying its motion for the appointment of an examiner. The panel, consisting of Judges Luis Felipe Restrepo, Stephanos Bibas and Anthony Joseph Scirica, took the appeal under advisement without indicating the timing of their decision. The FTX Group debtors are seeking to confirm a plan in June 2024 and targeting a July 2024 effective date. The appeal was certified by U.S. District Judge Colm Connolly in the absence of controlling precedent regarding whether the appointment of an examiner is mandatory if the debt threshold in section 1104(c)(2) of the Bankruptcy Code is met. The statute provides that a bankruptcy court “shall” appoint an examiner to investigate the debtor “as is appropriate” if the UST or a party makes such a request and the debtors’ fixed, liquidated, general unsecured debts exceed $5 million. The UST’s mandatory interpretation of the statute is challenged by the FTX group debtors and the official committee of unsecured creditors, which argue that the appointment of an examiner is discretionary. Bankruptcy Judge John Dorsey found that he had discretion to deny the UST’s request for an examiner, citing to the “as is appropriate” phrase in the statute as the operative language. He decided that appointing an examiner would result in substantial costs and duplicate the parallel FTX investigations by the debtors, the UCC, federal prosecutors, regulators and Congress and thus denied the request... [for more see https://reorg.com/ftx-examiner-appointment-appeal/]