What’s $30 million to a company that owes its customers billions?
Bankrupt crypto exchange FTX racked up more than $30 million in monthly fees from lawyers and advisers in February, according to new compensation reports filed in bankruptcy court.
The business of bankruptcy is expensive. Lawyers, financial advisers, investment bankers and consultants billed FTX approximately $29.7 million for compensation and another $407,000 in reimbursement costs during the shortest month of the year.
FTX racked up legal bills from a half-dozen firms in February. The exchange used the law firms Sullivan & Cromwell and Landis Rath & Cobb, management consulting firm AlixPartners, financial services company Perella Weinberg Partners, consulting firm Alvarez & Marsal North America and FTX CEO John Ray III’s Owl Hill Advisory.
Overall, the six firms logged more than 35,400 hours of work in February, according to their disclosures.
Legal fees are a major cost for bankrupt companies. Enron, the energy giant that Ray steered through bankruptcy, paid lawyers $700 million over the course of its unraveling, for example. FTX's $30 million February tab is slightly smaller than its January bill. Lawyers and advisers charged the crypto exchange $38 million in January, court documents show.
Sullivan & Cromwell had the largest February bill, charging FTX $13.5 million for 12,127 hours of work. The firm listed another $82,000 in 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 wrote in its February compensation report, which was filed on Tuesday.
The law firm said it investigated the scope and nature of customer entitlements in the bankruptcy case, collected and organized corporate records and responded to law enforcement investigating former CEO Sam Bankman-Fried and other executives, among other activities. Sullivan & Cromwell lawyers even appeared in other crypto bankruptcy cases, including Voyager Digital and Celsius Networks, to represent FTX.
Sullivan & Cromwell partners charge as much as $2,165 per hour, while special counsel, associates and paralegals have lower hourly rates. Brian Glueckstein, a Sullivan & Cromwell partner, billed FTX for $526,200 for his work in February.
Not far behind, Alvarez and Marsal billed FTX $12 million for 17,000 hours of work and listed $229,000 in expenses.
Landis Rath and Cobb, which logged 874 hours of work, billed FTX for $583,000 in compensation and $11,000 in reimbursements. Perella Weinberg charged the exchange its $450,000 monthly fee, along with $78,000 in expenses. And AlixPartners charged FTX $3 million for 3,796 hours of work, along with $5,000 in expenses.
Ray billed FTX $308,000 in fees and expenses. He logged nearly 240 hours of work in February.
Disclaimer: The former CEO and majority shareholder of The Block has disclosed a series of loans from former FTX and Alameda founder Sam Bankman-Fried.
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