Home CryptocurrencyBitcoin FTX CEO fights to retain lawyers as calls for removal intensify

FTX CEO fights to retain lawyers as calls for removal intensify

by SuperiorInvest

The CEO of crypto exchange FTX has rejected calls to replace its law firm Sullivan & Cromwell as lead counsel in its bankruptcy case.

John J. Ray III, who was named FTX’s new CEO on Nov. 11, filed the lawsuit movement on January 17, arguing that Sullivan & Cromwell was integral to taking control of the “dustbin fire” that had been handed to him.

Ray suggested that retaining their services was in the best interest of FTX lenders, arguing:

“Counselors are not villains in these cases. The villains are being pursued by the relevant law enforcement agencies largely based on the information and support they receive at my direction from the debtors’ advisers.’

The US Trustee, Andrew R. Vara, filed the application objection to retain the law firm on January 14, citing two separate issues.

He claimed that Sullivan & Cromwell failed to adequately disclose his connections and previous work for FTX. He also pointed out that, based on publicly available information, a former law firm partner became FTX’s legal representative 14 months before the bankruptcy filing.

Meanwhile, attorney James A. Murphy, who runs MetaLawMan’s Twitter handle, suggested on Jan. 14 that previous work she did for FTX was not the law firm’s only conflict of interest in the case.

He claimed that private equity firm Apollo Global was buying up creditors’ claims from FTX customers for a fraction of their value. Murphy notes that Apollo’s chairman, Jay Clayton, is also an employee of Sullivan & Cromwell, which has access to sensitive financial information.

The US Trustee also believed that the current request to retain Sullivan & Cromwell was flawed because they would be “usurping” the work of an independent examiner and the parties would be duplicating their services at the expense of FTX’s assets.

The trustee first called for the appointment of an independent investigator on December 1, citing a section of the bankruptcy code that orders the appointment examiner when certain debts exceed $5 million.

Related: SBF says Sullivan & Cromwell has disputed the insolvency claims

On January 10, a bilateral group of four American representatives sent a letter to bankruptcy judge in Delaware John Dorsey, requesting that he approve the motion to hire an independent examiner, expressing disbelief that the law firm could be labeled an “impartial” party.

However, Dorsey called the letter “an inappropriate ex parte communication” and said he would do so don’t take it into account when deciding whether to appoint an independent examiner or approve the retention of Sullivan & Cromwell.

However, Dorsey is ready to consider objection lender FTX filed Jan. 10 in deciding whether to retain Sullivan & Cromwell, with the lender also suggesting the law firm’s previous work for FTX posed a conflict of interest.

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