Andrew Vara, the US Trustee, has objected to a number of subpoenas that had been aimed at the inner circle of the co-founder of FTX, Sam Bankman-Fried.
These included his family as well as several members of the former senior staff of the now-defunct crypto exchange.
A subpoena refers to an order issued by a government agency, typically a court, for the individual to give evidence or to attend a court hearing.
The objection
The Department of Justice (DOJ) in the United States oversees the US Trustee Program, which oversees the administration of private trustees and bankruptcy cases.
Vara has been overseeing the Chapter 11 bankruptcy proceedings of the FTX crypto exchange which are quite complex.
The Trustee objected to the subpoenas that had been issued, stating that they would only give the Committee, or the Debtors the authority to duplicate the investigative efforts of an independent examiner, should one be appointed.
The filing referred to the case law, which says that it is the obligation of the bankruptcy court to ensure there are no unnecessary expenditures when they are administering an estate.
Independent examiner
An independent examiner usually has more investigative powers than are usually given in normal proceedings.
But, the appointment of such an examiner is considered expensive due to which they are usually appointed in the case of complex and high-profile bankruptcies.
These include bankruptcies, such as that of the oil company Enron that happened back in the 2000s and then in 2008 when Lehman Brothers went bankrupt.
The fraud case of Enron in the 2000s used an independent examiner, R. Neal Batson, and reports reveal that the total fees paid were around $90 million.
Vara said in the filing that if the court decides to appoint an independent examiner in the case of FTX, then the scope of Rule 2004 should be established as part of the investigation of the examiner.
This refers to the basic mechanism in US law that compels people to attend bankruptcy hearings. Vara said that the goal was to avoid unnecessary legal costs and work duplication.
More details
Even though it has not been confirmed as yet, there is a possibility that an independent examiner could be hired to oversee the FTX bankruptcy case.
This is due to the fact that an increasing number of regulatory bodies have demanded that one should be appointed for reviewing the financial statements that are included in FTX’s Chapter 11 bankruptcy proceedings.
Authorities of different states have come forward to do so because they believe that the restructuring team may be unable to handle the complexities involved in the FTX bankruptcy.
The list of states includes Tennessee, New Jersey, D.C, Idaho, Alaska, Texas, North Carolina, Maine, Oklahoma, Kentucky, California, Maryland, Illinois, Arkansas, New Hampshire, and Florida.
There had been talking of appointing an independent examiner before, but there had been objections because it would incur a cost of somewhere between $50 million and $100 million.
