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A U.S. Justice Department bankruptcy watchdog called for an independent investigation into FTX’s collapse, comparing the cryptocurrency platform’s sudden failure to the fall of Lehman Brothers, the Wall Street Journal reported. U.S. Trustee Andrew Vara, an official at the Justice Department unit monitoring bankruptcy courts, asked the judge overseeing FTX’s chapter 11 case to appoint an independent examiner to provide a transparent account of FTX’s failure because of the wider implications the exchange’s collapse has on the crypto industry. FTX’s collapse “is likely the fastest big corporate failure in American history,” said Vara, saying the platform suffered an astonishing loss in value from a market high of $32 billion earlier this year to bankruptcy. Vara said that an examiner is necessary to investigate “the substantial and serious allegations of fraud, dishonesty, incompetence, misconduct, and mismanagement” at FTX and circumstances around its collapse. Vara also said that an examiner should review whether any viable legal claims exist to remedy losses of FTX customers. He said reports produced by the examiner appointed in the bankruptcies of Lehman and subprime lender New Century Financial “stand as examples of the bankruptcy system serving the public interest in transparency and accountability.”

A bankruptcy judge said higher courts or Congress should clarify whether solvent companies can pass through chapter 11 bankruptcy without paying prepayment premiums and contractual interest to bondholders, WSJ Pro Bankruptcy reported. Judge Mary Walrath of the U.S. Bankruptcy Court in Wilmington, Del. said on Monday there is a higher likelihood the Supreme Court will weigh in if she elevated Hertz Global Holdings Inc.’s dispute with its bondholders directly to a Federal appellate court. Judge Walrath earlier this month rejected a request by a trustee for the Hertz bondholders to reconsider her 2021 ruling that had denied creditors the rights to interest payments at the contractual rate during bankruptcy. The trustee, Wells Fargo Bank N.A., had argued the car-rental company must pay $272 million including a make-whole premium and postbankruptcy interest at the contract rate. Hertz exited bankruptcy last year solvent, benefiting from surging prices for rental cars and used vehicles. The judge said earlier this month the best way may be to direct appeal to the Third Circuit. She said “this decision has to be decided by the Supreme Court or Congress.” In a written ruling on Monday, Judge Walrath clarified her earlier ruling and said Congress could have stated at the time it changed the bankruptcy code that a solvent debtor had to pay the contract rate of interest.