Bankruptcy Taxation Committee Newsletter

vol 19, num 1 | May 2024

Commercial &
Regulatory Law

AN ABI COMMITTEE NEWSLETTER

Visit the Commercial and Regulatory Law Committee page

► IN this issue:

Co-Chairs’ Corner
Statutory Construction Governs the Appointment of an Examiner

Co-Chairs’ Corner

Alan R. Rosenberg
Markowitz, Ringel, Trusty & Hartog, PA
Ft. Lauderdale, Fla.

April A. Wimberg
Dentons Bingham Greenebaum
Louisville, Ky.

Our committee’s leadership has been hard at work, organizing educational programming and social events to keep our members engaged. Here are some highlights of recent events.

Happy Hour, Educational Session at ABI’s Annual Spring Meeting
The Commercial and Regulatory Law Committee hosted an informal happy hour at The Lobby Bar in the Marriott Marquis Washington, DC during ABI’s Annual Spring Meeting on Thursday, April 18. A great time was had by all, and we thank everyone who came out and attended our gathering!

In addition to our happy hour, the committee joined forces with the Bankruptcy Litigation and Financial Advisor & Investment Banking Committees to host a well-attended panel titled, “The Impact of Business Email Compromise in the Bankruptcy Arena: Strategies and Tools to Protect Bankruptcy Participants.” The panel focused on the development of best practices to understand, mitigate and control the risks arising from business email compromise schemes. Hon. Bruce Harwood, Chief Judge of the U.S. Bankruptcy Court for the District of New Hampshire, moderated the panel, and speakers included Phil Denning of ICR Inc., David Fine of the Federal Bureau of Investigations, William Repasky of Frost Brown Todd LLP and Keith Wojcieszek of Kroll LLC.

Upcoming Webinar
The committee’s Special Projects division is in the process of organizing a webinar on merchant cash advance transactions in June 2024. Stay tuned for more updates!

Statutory Construction Governs the Appointment of an Examiner

Leslie R. Hendrix
U.S. Bankruptcy Court (D. Ariz.)
Arizona.

The Third Circuit Court of Appeals’ recent ruling in the FTX bankruptcy case severely limits a bankruptcy court’s discretion to deny the appointment of an examiner in a bankruptcy case. In FTX, the U.S. Trustee filed a motion to appoint an examiner. The bankruptcy court denied the motion. After a direct appeal to the Third Circuit Court of Appeals, the Third Circuit ruled that the appointment of an examiner is mandatory if requested by a party in interest or the UST, where the debtor’s unsecured debts exceed $5 million.

Background
In November 2022, FTX’s value collapsed over the course of roughly a week’s time. Samuel Bankman-Fried was the primary owner of FTX, a cryptocurrency company, and a substantial owner of Alameda Research, a cryptocurrency hedge fund. In November 2022, industry reports claimed that Alameda Research was financially compromised, and questions arose regarding a conflict of interest between Alameda Research and FTX. Subsequently, the public learned that FTX was using software to conceal the funneling of FTX customer funds to Alameda Research to bolster Alameda Research’s balance sheet. These revelations caused a run on FTX where customers withdrew billions of dollars over just a few days. The massive withdrawals caused a severe liquidity crisis and FTX’s collapse. Subsequent criminal investigations showed evidence of fraud and embezzlement of FTX’s customers’ funds.

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