Lawyers, consultants and other professionals working on FTX’s bankruptcy have collected $200 million in fees as they attempt to restructure the “smoldering wreckage” left by the cryptocurrency exchange’s collapse in November, an independent auditor has found.
In a 47-page filing Tuesday, a court-appointed fees examiner said she believes hundreds of lawyers and other financial and tax advisors from firms including Sullivan & Cromwell and Quinn Emanuel Urquhart & Sullivan worked The invoiced amount was not “completely unreasonable”.
“FTX is not the first commercial organization to be brought down by rogues,” Katherine Stadler wrote, apparently referring to company founder Sam Bankman-Fried, who was charged by federal prosecutors in December The exchange has had a spectacular implosion.
“However, what makes these cases unique is that the debtors (and other similar fintech firms) operate in a largely unregulated financial system, combined with their global reach, complete lack of corporate records, and even The most basic corporate governance does not exist,” she added.
Stadler’s report focused on the costs required in the first 90 days of bankruptcy proceedings, acknowledging that litigation appears to be “going to be very expensive by any standard.” The amount sought so far represents more than 2 percent of FTX’s reported assets of $5 billion, she added.
It details how the 46 lawyers working on the case earned more than $2,000 an hour and that Sullivan & Cromwell alone took in nearly $42 million in fees in the first 90 days of filing for bankruptcy.
Management consultants Alvarez & Marsal, which acted as financial advisor to FTX debtors, was the second highest biller with invoices of nearly $28 million, while Paul Hastings, representing unsecured creditors, racked up fees of more than $5.5 million.
However, the report concluded that “prudent management of administrative costs would lead to better outcomes for creditors” and recommended only minor adjustments.
Sullivan & Cromwell, Alvarez & Marsal and Paul Hastings did not immediately respond to requests for comment.
Bankman-Fried, who is due to go to trial in October, has previously challenged Sullivan & Cromwell’s appointment as legal counsel to FTX after filing for Chapter 11 bankruptcy last November, arguing that its work prior to the exchange’s collapse prevented the company from being impartial. act. Delaware bankruptcy judge John Dorsey dismissed similar challenges from two FTX clients in January, saying there was “no evidence of any actual conflict.”
Lawyers for the former cryptocurrency mogul, who pleaded not guilty to the federal charges against him, also said FTX debtors improperly acted as an arm of the justice system by assisting prosecutors while withholding information from the defense team.
FTX faces as many as 1 million potential creditors in its bankruptcy proceedings, including former customers, suppliers and lenders, who will have to compete with each other to prioritize repayments from the company’s remaining assets.