Third Circuit disposition — 23-2297

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 23-2297
______________
In re: FTX TRADING LTD., et al.,
Debtors
ANDREW R. VARA, US Trustee for Region 3,
Appellant
______________
On Appeal from the United States Bankruptcy Court
for the District of Delaware
(Case No. 22-11068)
Bankruptcy Judge: Honorable John T. Dorsey
_____________
Argued: November 8, 2023
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Before: RESTREPO, BIBAS and SCIRICA, Circuit Judges.
(Filed: January 19, 2024)
Anna O. Mohan
Brian J. Springer [ARGUED]
United States Department of Justice
Civil Division, Appellate Staff
Room 7533
950 Pennsylvania Avenue NW
Washington, DC 20530
Counsel for Plaintiff-Appellant
Jonathan C. Lipson [ARGUED]
Temple University
Beasley School of Law
1719 North Broad Street

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Philadelphia, PA 19122
Counsel for Amicus Appellant
Irv Ackelsberg
John J. Grogan
David A. Nagdeman
Langer Grogan & Diver
1717 Arch Street
Suite 4020, The Bell Atlantic Tower
Philadelphia, PA 19103
Counsel for Amicus Appellant
James L. Bromley [ARGUED]
Brian D. Glueckstein
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
Counsel for Debtor-Appellee
Adam G. Landis
Matthew R. Pierce
Landis Rath & Cobb
919 Market Street
Suite 1800, P.O. Box 2087
Wilmington, DE 19801
Counsel for Debtor-Appellee
Kristopher M. Hansen
Kenneth Pasquale [ARGUED]
Isaac S. Sasson
John F. Iaffaldano
Paul Hastings
200 Park Avenue
New York, NY 10166
Counsel for Defendant-Appellee
Matthew B. Lunn
Robert F. Poppiti, Jr.
Young Conaway Stargatt & Taylor
1000 N. King Street
Rodney Square
Wilmington, DE 19801
Counsel for Defendant-Appellee

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_______________
OPINION OF THE COURT
______________
RESTREPO, Circuit Judge.
Sometimes highly complex cases give rise to
straightforward issues on appeal. Such is the case here. Multi-
billion-dollar company FTX Trading Ltd. (“FTX”) filed for
bankruptcy after a sudden and unprecedented collapse that sent
shockwaves through the cryptocurrency industry. The issue
before us is whether 11 U.S.C. § 1104(c)(2) mandates the
Bankruptcy Court to grant the U.S. Trustee’s motion to appoint
an examiner to investigate FTX’s management. We hold that
it does, given both the statute’s plain text and Congress’s
expressed intent in enacting this portion of the Bankruptcy
Code. Accordingly, we will reverse the Bankruptcy Court’s
denial of the U.S. Trustee’s motion, and remand for the
appointment of an examiner consistent with this opinion.
I. Factual and Procedural History
Over the course of eight days in November 2022, the
cryptocurrency company FTX suffered a catastrophic decline
in value. The primary owner of FTX, Samuel Bankman-Fried,
also owned most of Alameda Research, a cryptocurrency
hedge fund. In early November, industry reports claimed that
Alameda Research was financially compromised, and
questions regarding a conflict of interest between the two
allegedly independent companies began to arise. What
followed were discoveries of multiple corporate failures,
including FTX’s use of software to conceal the funneling of
FTX customer funds into Alameda Research to bolster its
balance sheet. These discoveries caused FTX, a company that
had been valued at $32 billion earlier in 2022, to face a sudden
and severe liquidity crisis as customers withdrew billions of
dollars over the course of a few days. Since the collapse,

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criminal investigations into FTX have unearthed evidence of
widespread fraud and the embezzlement of customers’ funds.1
Immediately following the crash, on November 11,
2022, Mr. Bankman-Fried appointed John J. Ray, III to replace
him as CEO of FTX and its numerous affiliates (“FTX
Group”). Over the next three days, Mr. Ray filed multiple
voluntary petitions for relief under Chapter 11 of the United
States Bankruptcy Code, 11 U.S.C. §§ 101 et seq. Mr. Ray, an
experienced bankruptcy practitioner who claims to have
supervised the restructuring of “several of the largest corporate
failures in history,” stated in his first report as debtor in
possession that he had never before “seen such a complete
failure of corporate controls and such a complete absence of
trustworthy financial information.” JA 52. He deemed the
situation at FTX Group “unprecedented,” citing, inter alia, the
compromised integrity of the companies’ operating systems,
the “faulty regulatory oversight” of FTX’s operations abroad,
and the “concentration of control in the hands of a very small
group of inexperienced, unsophisticated and potentially
compromised individuals.” JA 52.
Mr. Ray further reported that many of the companies in
FTX Group lacked “appropriate corporate governance,”
operating without a functioning board of directors and failing
to produce audited financial statements. JA 59. He maintained
that FTX Group “did not maintain centralized control of its
cash” and kept no accurate list of its bank accounts or the
accounts’ signatories. JA 60. FTX Group companies were
historically unable to produce accurate financial statements or
a “reliable cash forecast.” JA 60–62. As a result of these “cash
management failures,” Mr. Ray was unable to determine how
much cash the companies had when the bankruptcy petitions
were filed. JA 61. He also found that FTX Group had “billions
in investments” in non-cryptocurrency assets, but these
investments could not be completely accounted for due to the
1 On November 2, 2023, Samuel Bankman-Fried was
convicted of seven wire fraud, conspiracy, and money
laundering charges. His sentencing is scheduled for March
2024. Other former FTX executives pled guilty to similar
charges.

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companies’ failure to “keep complete books and records.” JA
66.
In addition, Mr. Ray described how FTX Group failed
to implement a corporate system to regulate cash
disbursements. Employees would simply submit “payment
requests through an on-line ‘chat’ platform where a disparate
group of supervisors approved disbursements by responding
with personalized emojis.”2 JA 64. Mr. Ray discovered that
corporate funds were used to purchase homes and other
personal items for employees in the Bahamas, where FTX was
headquartered. For some real estate purchases, there was no
documentation categorizing the transactions as corporate loans
and the properties were recorded in the Bahamas under the
names of the FTX employees or advisors.
Regarding the companies’ cryptocurrency assets, Mr.
Ray declared FTX Group engaged in “[u]nacceptable
management practices” including, inter alia, “the use of an
unsecured group email account” to access “critically sensitive
data” and “the use of software to conceal the misuse of
customer funds.” JA 64–65. Mr. Ray claimed to identify $372
million of unauthorized cryptocurrency transfers initiated on
FTX’s petition date, and the subsequent unauthorized
“minting” of $300 million in FTX’s cryptocurrency tokens,
FTTs. Id. The disordered state of FTX Group at the time it
filed for bankruptcy, exacerbated by the failure of FTX
founders to identify sources of supposed additional assets,
meant that Mr. Ray and his team of professionals “located and
secured only a fraction of the digital assets.” Id.
Within weeks of the filing of the bankruptcy petitions,
the United States Trustee moved for the appointment of an
examiner pursuant to 11 U.S.C. § 1104(c). In so doing, the
U.S. Trustee posited that a public report of the examiner’s
findings could reveal the “wider implications” that FTX’s
unprecedented collapse had for the cryptocurrency industry.
JA 97. The U.S. Trustee also claimed an examiner could
“allow for a faster and more cost-effective resolution” of the
2 Mr. Ray revealed that there was no comprehensive list of FTX
Group employees and only incomplete human resource records
of the terms and conditions of employment.

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bankruptcy proceedings because Mr. Ray could concentrate on
his “primary duty of stabilizing the debtors’ businesses” while
the examiner investigated FTX’s compromised pre-petition
management, which was purportedly responsible for
misappropriating $10 billion in customers’ assets. Id.
Of greater significance for the purposes of this appeal,
the U.S. Trustee argued that the Code mandates the Bankruptcy
Court to grant their motion and order the appointment of an
examiner. Section 1104(c) provides that, in instances like this
where no trustee has been appointed, then:
[O]n request of a party in interest or the United
States trustee, and after notice and a hearing, the
court shall order the appointment of an examiner
to conduct such an investigation of the debtor as
is appropriate, including an investigation of any
allegations of fraud, dishonesty, incompetence,
misconduct, mismanagement, or irregularity in
the management of the affairs of the debtor of or
by current or former management of the debtor,
if—
(1) such appointment is in the interests
of creditors, any equity security
holders, and other interests of the
estate; or
(2) the debtor’s fixed, liquidated,
unsecured debts, other than debts
for goods, services, or taxes, or
owing to an insider, exceed
$5,000,000.
11 U.S.C. § 1104(c) (emphasis added). The U.S. Trustee
argued that, because they made the request and FTX Group’s
unsecured debts “substantially exceed” $5 million,
appointment of an examiner was mandatory under the plain
language of subsection (c)(2).3 JA 98.
3 In addition, the U.S. Trustee advanced the argument that the
appointment of an examiner would also be proper under
subsection 1104(c)(1), claiming that an investigation would be
“in the best interests of the Debtors’ estates, their creditors, and

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The Committee for Unsecured Creditors (“Creditors’
Committee”), the Joint Provisional Liquidators of FTX Digital
Markets Ltd., and the Debtors filed their objections to the U.S.
Trustee’s motion. At a hearing before the Bankruptcy Court,
the U.S. Trustee reiterated their position that the appointment
of an examiner in this instance is mandatory, and argued this
interpretation is supported by legislative history that conveys
Congress’s intent to guarantee an independent investigation
into any large-scale bankruptcy. The opposing parties argued
the phrase “as is appropriate” in Section 1104(c) renders the
appointment of an examiner subject to the Bankruptcy Court’s
discretion. JA 299, 307. They claimed such an appointment
here would be highly inappropriate, given that an investigation
would create an unjustifiable cost for creditors, interfere with
their efforts to stabilize FTX Group, duplicate their findings of
management wrongdoing, and pose a security risk to
cryptocurrency codes.
The Bankruptcy Court agreed with those who opposed
the motion and ruled the appointment of an examiner was
discretionary under the Code. JA 17–18. The Court
acknowledged FTX Group’s unsecured debt far exceeded $5
million but found the phrase “as is appropriate” in Section
1104(c) allowed it to deny the U.S. Trustee’s motion to appoint
an examiner, despite the statutory requirements having been
met. The Court supported its conclusion by citing Bankruptcy
Court decisions and congressional records from the year before
the revised Code was enacted.
II. Jurisdiction and Standard of Review
The U.S. Trustee appealed the Bankruptcy Court’s
decision to the District Court and moved to certify the order for
direct appeal pursuant to 28 U.S.C. § 158(d)(2).4 The District
equity security holders” given the grounds to suspect “actual
fraud, dishonesty, or criminal conduct in the management of
the Debtors.” JA 100 ¶ 35.
4 The U.S. Trustee first moved for certification in Bankruptcy
Court, and then renewed the motion when jurisdiction
transferred to the District Court pursuant to Fed. R. Bankr. P.
8006(b).

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Court granted the certification motion, and this Court
authorized the direct appeal. We have jurisdiction over
Chapter 11 cases under 28 U.S.C. § 158(d)(2)(A). This Court
reviews questions of law decided by the Bankruptcy Court de
novo. In re Trump Ent. Resorts, 810 F.3d 161, 166–67 (3d Cir.
2016).
III. Discussion
The issue before us is one of statutory interpretation:
whether the plain text of Section 1104(c)(2) requires a
bankruptcy court to appoint an examiner, if requested by the
U.S. Trustee or a party in interest, and if “the debtor’s total
fixed, liquidated, unsecured debt” exceeds $5 million. We
hold that it does. The Bankruptcy Court erred in denying the
U.S. Trustee’s motion to appoint an examiner to investigate
FTX Group.
“Our interpretation of the Bankruptcy Code starts
‘where all such inquiries must begin: with the language of the
statute itself.’” Ransom v. FIA Card Servs., N.A., 562 U.S. 61,
69 (2011) (quoting United States v. Ron Pair Enters., Inc., 489
U.S. 235, 241 (1989)). In interpreting a statute, we are required
“to give effect to Congress’s intent.” In re Trump, 810 F.3d at
167. We presume that intent is expressed through the ordinary
meaning of the statute’s language. Id. If the meaning of the
text is clear, “the sole function of the courts—at least where the
disposition required by the text is not absurd—is to enforce
[the statute] according to its terms.” Hartford Underwriters
Ins. Co. v. Union Planters Bank, N.A., 530 U.S. 1, 6 (2000)
(internal quotation marks omitted). We therefore start by
examining the plain text of Section 1104(c).
Congress made plain its intention to mandate the
appointment of an examiner by using the word “shall,” as in
the Bankruptcy Court “shall” appoint an examiner if the terms
of the statute have been met. 11 U.S.C. § 1104(c). The
meaning of the word “shall” is not ambiguous. It is a “word of
command,” Black’s Law Dictionary (5th ed. 1979), that
“normally creates an obligation impervious to judicial
discretion,” Lexecon Inc. v. Milberg Weiss Bershad Hynes &
Lerach, 523 U.S. 26, 35 (1998). We have held that “shall” in
a statute is interpreted as “must,” which means “shall” signals

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when a court must follow a statute’s directive regardless of
whether it agrees with the result. Scott v. Vantage Corp., 64
F.4th 462, 477 (3d Cir. 2023). To interpret “shall” as anything
but an obligatory command to appoint an examiner, when the
conditions of subsection 1104(c)(2) have been met, would
require us “to abandon plain meanings altogether.” Litgo N.J.
Inc. v. Comm’r N.J. Dep’t of Env’t Prot., 725 F.3d 369, 397
n.17 (3d Cir. 2013) (citations omitted). Instead, the language
of subsection 1104(c)(2) requires us to command the
Bankruptcy Court to grant the U.S. Trustee’s request for an
examiner in this instance. See Me. Cmty. Health Options v.
United States, 140 S. Ct. 1308, 1320 (2020) (“The first sign
that the statute imposed an obligation is its mandatory
language: ‘shall.’”).
Despite the mandatory language, the Bankruptcy Court
found that the phrase “as is appropriate” controls the
appointment of an examiner under Section 1104(c). Following
this interpretation, the text “the court shall order the
appointment of an examiner to conduct such an investigation
of the debtor as is appropriate” means the Bankruptcy Court
appoints an examiner only if it decides an investigation would
suit the circumstances. 11 U.S.C. § 1104(c). According to this
reading, context gives “shall” the meaning of “may.” We
disagree. Under the last-antecedent rule of statutory
construction, “qualifying words, phrases, and clauses are to be
applied to the words or phrase immediately preceding and not
to others more remote.” Stepnowski v. Comm’r, 456 F.3d 320,
324 (3d Cir. 2006) (quoting United States v. Hodge, 321 F.3d
429, 436 (3d Cir. 2003)). Applying the rule, the phrase “as is
appropriate” modifies the words that immediately precede it—
which are “to conduct such an examination of the debtor,” not
“shall order the appointment of an examiner.” 11 U.S.C. §
1104(c).
Although instructive, the last-antecedent rule is not
absolute and we therefore look to other indicia to discern the
phrase’s meaning. Viera v. Life. Ins. Co. of N. Am., 642 F.3d
407, 419 (3d Cir. 2011) (citing J.C. Penney Life Ins. Co. v.
Pilosi, 393 F.3d 356, 365 (3d Cir. 2004)). We need not look
far. As the U.S. Trustee argued below, Section 1104(c) states
“as is appropriate,” not “if appropriate.” JA 288 (emphasis
added). While “if appropriate” indicates the Bankruptcy Court

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has a choice, the phrase “as is appropriate” indicates it is
permitted to determine what is pertinent given the specific
circumstances of each case. This interpretation—that “as is
appropriate” refers to the nature of the investigation, not the
appointment of the examiner—is further bolstered by the
context. Immediately after the phrase “as is appropriate,” the
statute provides the word “including” and a list of topics that
merit investigation: “allegations of fraud, dishonesty,
incompetence, misconduct, mismanagement, or irregularity in
the management of the affairs of the debtor of or by current or
former management of the debtor.” 11 U.S.C. § 1104(c).
Under the Bankruptcy Court’s interpretation, the
appointment of an examiner under either subsection of Section
1104(c) would be subject to a court’s discretion and a judge
would have the final say as to whether an investigation was
warranted. But this interpretation runs counter to the statute’s
plain language and established canons of construction.
Whereas subsection 1104(c)(1) permits a court to consider “the
interests of creditors, any equity security holders, and other
interests of the estate,” subsection (c)(2) allows for no such
consideration. We agree with the Sixth Circuit’s conclusion
that “[t]he contrast” between the two subsections “could not be
more striking.” In re Revco D.S., Inc., 898 F.2d 498, 501 (6th
Cir. 1990). There is no weighing of interests in subsection
1104(c)(2); the court is only permitted to determine whether
the unsecured debt minimum of $5 million has been met. Id.
If we ignore the differences between the plain text of the two
subsections, then subsection (c)(2) becomes discretionary and
indistinguishable from subsection (c)(1). Such a reading
would defy the “usual rules of statutory interpretation” by
assuming that “Congress adopt[ed] two separate clauses in the
same law to perform the same work.” United States v. Taylor,
596 U.S. 845, 857 (2022). We make no such assumption here.
In addition to contravening rules of statutory
construction, reading subsection (c)(2) as discretionary would
require disregarding direct evidence of Congress’s intent.5 In
5 The Bankruptcy Code was enacted after a “compromise bill”
passed both houses of Congress in October 1978. See Leonard
L. Gumport, The Bankruptcy Examiner, 20 Cal. Bankr. J. 71,
91 (1992). When proposing the bill to Congress, the sponsors

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obtaining passage of the Bankruptcy Code, the Senate floor
manager explained the “business reorganization chapter”
ensures “special protection for the large cases having great
public interest.” 124 CONG. REC. 33990 (1978). Such
protection comes from a provision guaranteeing an
“automatically appointed” examiner in large cases, a measure
designed to “preserve[] and enhance[]” debtors’ and creditors’
interests, “as well as the public interest.” Id. The Code’s
sponsors agreed that, in cases where the “fixed, liquidated,
unsecured debt” reached $5 million, the appointment of an
examiner is required “to [ensure] that adequate investigation of
the debtor is conducted to determine fraud or wrongdoing on
the part of present management.” 124 CONG. REC. 32403
(1978). To guarantee that “the examiner’s report will be
expeditious and fair,” the sponsors forbade the examiner from
acting as or representing a trustee in the bankruptcy and
required that the investigation remain separate from the
reorganization process.6 Id. at 32406. In enacting Chapter 11,
the sponsors adopted a revised approach where the needs of
of that legislation, Representative Edwards and Senator
DeConcini, made “nearly identical statements . . . to their
respective chambers.” Id. at 91–92. These statements are
“persuasive evidence” of the legislation’s intent. See Begier v.
IRS, 496 U.S. 53, 64 n.5 (1990) (“Because of the absence of a
conference and the key roles played by Representative
Edwards and his counterpart floor manager Senator
DeConcini, we have treated their floor statements on the
Bankruptcy Reform Act of 1978 as persuasive evidence of
congressional intent.”).
6 The Bankruptcy Code “prohibits an examiner from serving as
a trustee or as counsel for the trustee in order to ensure that
examiners may not profit from the results of their work.” In re
Big Rivers Elec. Corp., 355 F.3d 415, 430 (6th Cir. 2004).
Such independence distinguishes examiners from other
participants in the Chapter 11 bankruptcies who may
investigate wrongdoing but who also seek to benefit financially
from the reorganization plan. See, e.g., 11 U.S.C. § 1102(b)(1)
(members of the creditors’ committee “shall ordinarily” consist
of either the seven largest creditors or those who organized
before the filing of the petition).

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security holders are balanced against “equally important public
needs relating to the economy, such as employment and
production, and other factors such as the public health and
safety of the people or protection of the national interest.” Id.;
see also Young v. United States, 535 U.S. 43, 53 (2002) (“[T]he
Bankruptcy Code incorporates traditional equitable
principles.”). Because subsection 1104(c)(2) was enacted to
protect the public interest in larger bankruptcy cases, a “refusal
to give effect to the mandatory language” regarding the
appointment of an examiner would result in a failure “to give
effect to the legislative intention.” 7 Collier on Bankruptcy ¶
1104.03[2][b] (16th ed. 2023).
Despite this clear intention to protect the public interest,
Congress tempered the mandatory nature of subsection
1104(c)(2) by making both the request for an examiner and the
scope of the investigation subject to acts of discretion. First,
an examiner is not automatically appointed in cases where $5
million of unsecured debt exists. Rather, the U.S. Trustee or a
party in interest must deem one necessary and motion the court.
11 U.S.C. § 1109(b). While the Debtors argue granting
discretion to every party in interest is illogical and encourages
abuse, they provide no evidence to support either position.
That a party in interest may abuse its discretion by requesting
an examiner is not grounds for deeming Congress’s grant of
such discretion absurd.7
7 At argument, the government stated that during the fiscal year
of 2022, the U.S. Trustee filed fewer than ten motions to
appoint examiners. Transcript of Oral Argument at 6:20–23,
FTX Trading Ltd. (Nov. 8, 2023) (No. 23-2297). He further
noted that there has been no evidence of a “fallout” from the
Sixth Circuit’s decision in In re Revco D.S., Inc., 898 F.3d at
501, which held the appointment of an examiner is mandatory
under subsection 1104(c)(2) in 1990, over thirty years ago. Id.
at 6:16–18; see also George M. Treister & Richard B. Levin,
Fundamentals of Bankruptcy Law 369–71 (7th ed. 2010)
(“Requests for an examiner are infrequent, in both large and
small Chapter 11 cases.”). In any case, courts must “give effect
to [a] plain command, even if doing that will reverse the
longstanding practice under the statute.” Lexecon Inc., 523
U.S. at 35 (citations omitted).

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Second, while a bankruptcy court must appoint an
examiner if the statutory requirements are met, the phrase “as
is appropriate” in Section 1104(c) means the court “retains
broad discretion to direct the examiner’s investigation,”
including its scope, degree, duration, and cost. 5 Norton
Bankr. L. & Prac. § 99:25 (3d ed. 2023); see also 11 U.S.C. §
330(a)(3). By setting the investigation’s parameters, the
bankruptcy court can ensure that the examiner is not
duplicating the other parties’ efforts and the investigation is not
unnecessarily disrupting the reorganization process.
Moreover, to the extent the mandatory nature of subsection
1104(c)(2) encourages parties in interest to invoke an
investigation to tactically delay proceedings, the bankruptcy
court has the discretion to continue with the confirmation
process without receiving the examiner’s findings or public
report. 7 Collier on Bankruptcy ¶ 1104.03[2][b] (16th ed.
2023).
In this instance, the Bankruptcy Court denied the
motion for an examiner in part because it deemed Mr. Ray to
be “completely independent” from FTX’s founding members
and that any remaining prior officers “have been stripped of
any decision making authority.” JA 9–10. On appeal, the
debtors in possession and the Creditors’ Committee argue an
investigation would be duplicative and wasteful given their
ongoing efforts to uncover all pre-petition mismanagement.
Neither position is relevant, given our holding that the
appointment of the examiner is mandatory under the Code. But
nor is either position persuasive, given that Congress has
guaranteed that an investigation under subsection 1104(c)(2)
would differ from those conducted by the Appellees in several
significant ways. 8
8 The duties of an examiner are set forth in 11 U.S.C. §
1106(a)(3) and (4), which provide that an examiner shall,
“except to the extent that the court orders otherwise,”
investigate “the acts, conduct, assets, liabilities, and financial
condition of the debtor, the operation of the debtor’s business
and the desirability of the continuance of such business, and
any other matter relevant to the case or to the formulation of a
plan;” and then “file a statement of any investigation,” which
must include any fact “pertaining to fraud, dishonesty,

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First, an examiner must be “disinterested” as defined by
11 U.S.C. § 101(14), which means a “creditor, an equity
security holder, or an insider,” or anyone with “an interest
materially adverse to the interest of the estate” cannot be
appointed to conduct a Section 1104(c) investigation.9 See 11
U.S.C. § 1104(d). The Code also forbids a debtor in
possession, the quintessential “insider,” from performing the
duties of an examiner and investigating itself. See 11 U.S.C. §
1107(a) (stating a debtor in possession “shall have all the rights
. . . and powers” and “perform all the functions and duties” of
a trustee, except the duties granted to trustees and examiners in
subsections 1106(a)(2) through (4)). An examiner “is first and
foremost disinterested and nonadversarial” and “answers
solely to the Court.” In re Big Rivers Elec. Corp., 355 F.3d
415, 432 (6th Cir. 2004) (quoting In re Baldwin United Corp.,
46 B.R. 314, 316 (S.D. Ohio 1985)). This requirement of
disinterest is particularly salient here, where issues of potential
conflicts of interest arising from debtor’s counsel serving as
pre-petition advisors to FTX have been raised repeatedly.
Moreover, the U.S. Trustee raised the concern that, given the
reports of widespread fraud, officers or employees who may
have engaged in wrongdoing could remain at FTX Group. JA
100 ¶ 35. In enacting subsection 1104(c)(2), Congress made
certain that neither the Bankruptcy Court nor the Appellees
could deem these issues unworthy of an outside investigation
in this particular bankruptcy, which certainly qualifies as a
incompetence, misconduct, mismanagement, or irregularity in
the management of the affairs of the debtor, or to a cause of
action available to the estate.”
9 Under the Bankruptcy Code, a “disinterested person” is
defined as a person that “is not a creditor, an equity security
holder, or an insider;” “is not and was not, within 2 years before
the date of the filing of the petition, a director, officer, or
employee of the debtor;” and “does not have an interest
materially adverse to the interest of the estate or of any class of
creditors or equity security holders, by reason of any direct or
indirect relationship to, connection with, or interest in, the
debtor, or for any other reason.” 11 U.S.C. § 101(14)(A)–(C).

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“large case[] having great public interest.” 124 CONG. REC.
33990 (1978).
Second, an examiner appointed under subsection
1104(c)(2) must make their findings public, an obligation
neither a creditor committee nor a debtor in possession
shares.10 Compare 11 U.S.C. § 1103(c)(2) and 11 U.S.C. §
1107(a), with § 1106(a)(4), (b). Requiring a public report
furthers Congress’s intent to protect the public’s interest as
well as those creditors and debtors directly impacted by the
bankruptcy. Such protection seems particularly appropriate
here. The collapse of FTX caused catastrophic losses for its
worldwide investors but also raised implications for the
evolving and volatile cryptocurrency industry. For example,
an investigation into FTX Group’s use of its own
cryptocurrency tokens, FTTs, to inflate the value of FTX and
Alameda Research could bring this practice under further
scrutiny, thereby alerting potential investors to undisclosed
credit risks in other cryptocurrency companies. In addition to
providing much-needed elucidation, the investigation and
examiner’s report ensure that the Bankruptcy Court will have
the opportunity to consider the greater public interest when
approving the FTX Group’s reorganization plan.11
10 The public report requirement is set forth in 11 U.S.C § 1106
(a)(4)(A) and § 107(a). Section 1106(a) sets forth the duties of
an examiner. Subsection 1106(a)(4) directs an examiner to
“file a statement of any investigation” which includes “any fact
ascertained pertaining to fraud, dishonesty, incompetence,
misconduct, mismanagement, or irregularity in the
management of the affairs of the debtor, or to a cause of action
available to the estate.” 11 U.S.C. § 1106(a)(4)(A). Such a
statement is deemed public under 11 U.S.C. § 107(a).
11 At argument, counsel for the unsecured Creditors’
Committee posited that examiners in large-scale bankruptcies
are not appointed as a matter of course and cited three
examples: In re Genesis Global Holdco, LLC., No. 1:23-bk-
10063, ECF 1 et seq. (Bankr. S.D.N.Y. Jan. 19, 2023), In re
Voyager Digital Holdings, Inc., No. 1:22-bk-10943, ECF 1 et
seq. (Bankr. S.D.N.Y. July 5, 2022), In re JCK Legacy Co.,

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IV. Conclusion
For the foregoing reasons, we reverse the decision of the
Bankruptcy Court and remand with instructions to order the
appointment of an examiner under 11 U.S.C. § 1104(c)(2).
No. 1:20-bk-10418, ECF 1 et seq. (Bankr. S.D.N.Y. Feb. 13,
2020). In searching the above-cited docket entries, it appears
no motion requesting the appointment of an examiner pursuant
to 11 U.S.C. § 1104(c)(2) was ever made. Transcript of Oral
Argument 31:21–32:1, FTX Trading Ltd. (Nov. 8, 2023) (No.
23-2297).

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