Going broke isn't cheap.
Troubled crypto exchange FTX and its affiliated companies racked up more than $20 million in legal and consulting bills during the first several months of its bankruptcy case, according to overnight court filings.
The crypto exchange filed for bankruptcy protection in November. Since then, FTX installed a new CEO and retained three law firms and two consulting firms to unwind its massive bankruptcy case.
The initial bills highlight how expensive the wind-down of the global crypto giant could be, and could diminish the amount of return creditors will see from the bankruptcy. According to FTX's new leadership, the exchange and other entities put into Chapter 11 bankruptcy in the U.S. held approximately $1.4 billion as of Dec. 31, most of it with investment fund Alameda Research and holding company West Realm Shires.
Lawyers and consultants billed the crypto exchange approximately $20.3 million, according to applications for compensation filed in the U.S. Bankruptcy Court for the District of Delaware.
White shoe law firm Sullivan & Cromwell sent FTX the largest bill. The firm is charging FTX $9.5 million for 6,561 hours of work from Nov. 12 to Nov. 30, along with $105,000 for expenses.
“The services performed by S&C during the fee period represent one of the most complicated, multi-disciplinary exercises by any law firm in any area of law,” Sullivan & Cromwell noted in its court filing.
That work included coordinating filings for FTX’s more than 100 entities that filed for bankruptcy protection, responding to hacks, launching an investigation into the scope of customer entitlements on the day of the bankruptcy filing and coordinating with joint provisional liquidators hired to wind down operations in other countries, mainly Antigua and Barbuda and the Bahamas.
The second most expensive bill came from the consulting firm Alvarez & Marsal. The company billed FTX $6.3 million for 7,925 hours of work from Nov. 11 to Nov. 30.
Meanwhile, law firm Quinn Emanuel Urquhart & Sullivan billed FTX $1.5 million for 1,111 hours from Nov. 11 to Dec. 31. Another law firm, Landis Rath & Cobb, billed FTX $1.2 million for 1,919 hours of work during the same period. Consulting firm AlixPartners said FTX’s bill for the period from Nov. 28 to Dec. 31 was $1.1 million for 1,340 hours of work.
The crypto exchange’s new boss also disclosed his fees in court filings. FTX CEO John Ray billed the company $694,000 for 538 hours of work during the period from Nov. 11 to Dec. 31 through his firm Owl Hill Advisory.
Disclaimer: Beginning in 2021, Michael McCaffrey, the former CEO and majority owner of The Block, took a series of loans from founder and former FTX and Alameda CEO Sam Bankman-Fried. McCaffrey resigned from the company in December 2022 after failing to disclose those transactions.
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