US Judge Calls Senators’ Letter on FTX Bankruptcy Inappropriate

• Judge John Dorsey of the U.S. Bankruptcy Court for the District of Delaware called a joint letter from four United States senators about the ties between FTX and Sullivan & Cromwell LLP “inappropriate ex parte communication” and said he would not take it into account.
• The senators sent the letter on Jan. 9 and highlighted concerns about the ties between the exchange and the law firm, which as the lead law firm in the bankruptcy proceedings would be tasked with scrutinizing alleged past wrongdoing.
• Ex parte refers to an action taken by one party in a legal proceeding without participation from the opposing party.

During a hearing on January 11th, Judge John Dorsey of the U.S. Bankruptcy Court for the District of Delaware addressed a joint letter sent to him by four United States senators about the ties between FTX and Sullivan & Cromwell LLP. The senators sent the letter on January 9th to highlight concerns regarding the law firm, which as the lead law firm in the bankruptcy proceedings would be tasked with scrutinizing alleged past wrongdoing by the exchange.

Judge Dorsey called the letter “inappropriate ex parte communication” and said he would not take it into account in his decision. Ex parte refers to an action taken by one party in a legal proceeding without participation from the opposing party. The letter was sent by a bipartisan group of senators — John Hickenlooper, Thom Tillis, Elizabeth Warren and Cynthia Lummis — who questioned the appointment of Sullivan & Cromwell, and supported a motion for the appointment of an independent examiner.

The motion was filed by the U.S. Trustee on December 12th, and it noted that the law firm had previously provided FTX with legal advice and that members of the law firm had ties to FTX’s CEO and majority shareholder Sam Bankman-Fried. The letter stated that the independent examiner should be tasked with investigating the law firm’s role in the bankruptcy proceedings and any potential conflicts of interest.

Judge Dorsey said he would make his decisions on the matters based only upon admissible evidence and the arguments presented in open court. He did not provide any further comment on the letter or the appointment of an independent examiner. It is unclear when the judge will make a decision on the matter.