FTX has become one of the costliest bankruptcy cases in the history of Chapter 11 bankruptcy proceedings. According to a Bloomberg report, fees associated with the proceedings have hit a milestone of nearly $1 billion.
According to a January 2 report, about $948 million had been processed to law firms, with court reports showing that about $952 million had been earmarked for said purposes. The figure puts the FTX proceeding among the costliest cases in the United States legal history.
FTX creditors to earn more than they were owed
The report is coming after creditors were told that they would get 118% more than what they lost in 2022. This is the first time it is happening, with proceedings always leaving creditors with pennies on the dollar. According to Bloomberg, the creditors can thank legal reps who have spent time tracking down all the funds scattered across different accounts.
Some of the beneficiaries are hedge funds which picked up user claims after the company went bankrupt in 2022. According to reports, the platform has commenced repayments. While the company is repaying investors heavily, the cost of proceedings is high. While other high-profile bankruptcy cases like Blockfi and the like have seen $500 million in fees, it is a fraction of the FTX proceeding.
At the center of the expenses is Sullivan & Cromwell LLP, the lead law firm of FTX that has seen about $248 million in fees. The company’s financial adviser Alvarez & Marsal has been compensated with about $306 million. In addition, the lawyers in charge of FTX creditors and customers have also seen $110 in charges. According to Bankruptcy data, the accumulation of all these fees has put the figure as the costliest in the history of bankruptcy cases.
According to lawyers, the fees could have been avoided if FTX had learned to manage its funds with care. Another expert mentioned that the firm could have seen the figure drastically reduced if it had learned to keep better records of its financials. In the statement of present CEO John Ray, who is also the restructuring expert, the company locked corporate controls and trustworthy financial data.
He added that during his career, he had never seen something like that. His firm has netted more than $8 million for helping in the restructuring process, according to court records. As the situation continues to unfold, lawyers will be hoping to uncover more assets and funds, which will be passed along to creditors.