The FTX bankruptcy judge reportedly criticized the joint letter from four US senators calling for an independent reviewer in the FTX bankruptcy case.
As reported by Cointelegraph, the senators sent a letter on Jan. 9 highlighting their concerns about the ties between FTX and their legal representative, Sullivan & Cromwell LLP.
However, in a January 11 hearing, U.S. Bankruptcy Court Judge John Dorsey for the District of Delaware called the letter “an improper ex parte communication” that he did not consider in his ruling.
“I will make my decisions on the issues solely on the basis of admissible evidence and arguments presented in open court,” he said during the hearing, according to Law360. report January 11.
Ex parte refers to an action taken by one party in a legal proceeding without the participation of the opposing party.
The bipartite of January 9 letter was addressed to Judge Dorsey by Senators John Hickenlooper, Thom Tillis, Elizabeth Warren and Cynthia Lummis, questioning the appointment of Sullivan & Cromwell LLP as counsel for FTX while supporting a motion to appoint an independent reviewer .
The motion was deposit by the US Trustee on December 12.
According to the letter, the senators noted that the law firm had previously provided FTX with legal advice and that members of the law firm had left to take up positions at FTX, prompting one of the senators to suggest that there might be a conflict of interest.
Get this: FTX legal counsel *before the collapse* wants to be appointed to oversee investigations into the collapse.
— Senator John Hickenlooper (@SenatorHick) January 10, 2023
A spokesperson for Sullivan & Cromwell told Cointelegraph that the law firm meets the definition of “disinterested” under the US Bankruptcy Code and has “never been the primary outside counsel for an FTX entity.”
Related: FTX client names will remain sealed for now, rules judge says
The judge’s rejection of the senators’ letter does not mean that he will deny the motion to appoint an independent reviewer or endorse Sullivan & Cromwell as counsel for FTX.
The judge will still have to consider the objection to the appointment of Sullivan & Cromwell by FTX creditor Warren Winter, whose representatives filed an amended request objection on January 10, saying the appointment could undermine public confidence in the bankruptcy process and that the law firm itself was a “target of investigation” regarding its own “potential liability.”
Independent examiners are often appointed by bankruptcy courts to investigate the details of complex cases before them and are able to present information to the courts from an independent perspective.
They have been named in other high-profile bankruptcy cases such as Lehman Brothers during the subprime mortgage crisis and crypto exchange Celsius.