Against the Rules with Michael Lewis Judging Sam: Judging the FTX Bankruptcy
Mar 27, 2024
Jonathan Lipson, a bankruptcy law expert at Temple Law School, dives into the tumultuous FTX bankruptcy proceedings. He discusses significant flaws in the U.S. bankruptcy system that these cases reveal. Lipson challenges the controversial choice not to appoint an examiner, raising critical questions about transparency and accountability. He also dissects the dynamic tensions between oversight and prosecution, and examines how FTX's leadership has navigated these legal complexities, affecting stakeholder recovery prospects.
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Importance of FTX Bankruptcy Proceedings
- The FTX bankruptcy case is important due to its impact on creditors and investors and its potential distortion of the criminal prosecution.
- Millions lost money, and the bankruptcy process may have influenced the prosecution's actions.
Rare Appointment of Examiners
- Examiners are rarely appointed in bankruptcy cases despite being legally mandated in certain situations.
- Debtors and creditors often unite against examiners due to their investigative nature and associated costs.
Sullivan & Cromwell's Role
- Sullivan & Cromwell represented FTX before and during the bankruptcy, raising concerns about potential conflicts of interest.
- Their pre-bankruptcy work involved acquisitions, regulatory dealings (particularly with the CFTC), and portraying FTX as financially stable.
