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Documents Reveal FTX's Legal Bills a SHOCKING $38 MILLION... For Just ONE Month!
According to court records that have just been made available to us, there has been nothing less than a massive army of professionals working non-stop to clean up the mess at FTX.
They've been tasked with examining every bit of FTX's business, due to the lack of record keeping during the reign of it's former CEO, Sam Bankman-Fried.
Of course, hiring a large amount people qualified to review complex financial data doesn't come cheap -but no one seems to have expected it would be this expensive either, as these firms have now billed FTX $38 million PLUS expenses...and that's just for January!
Leading the pack is the law firm Sullivan & Cromwell, which was hired as counsel. Along with them, the administrators have also retained Quinn Emmanuel Urquhart & Sullivan and Landis Rath & Cobb as special counsel for the proceedings. Meanwhile, consultancy firm AlixPartners was brought in to conduct forensic analysis on DeFi products and tokens that were in FTX's possession.
On the financial front, Alvarez & Marsal and Perella Weinberg Partners were tasked with sorting through FTX's accounting records and determining which assets it could sell. According to court filings, Sullivan & Cromwell billed $16.8 million for January, while Quinn Emanuel Urquhart & Sullivan billed $1.4 million, and Landis Rath & Cobb billed $663,995. Collectively, the three firms have over 180 lawyers assigned to the case and over 50 non-lawyer staff, such as paralegals.
What's more, court filings show that Sullivan & Cromwell lawyers and staff billed a total of 14,569 hours for January. The largest project that Sullivan & Cromwell worked on was discovery, followed by asset disposition and asset analysis and recovery.
Interestingly, the U.S. Department of Justice initially objected to FTX hiring Sullivan & Cromwell, citing potential conflicts of interest. Sam Bankman-Fried, FTX's founder, also objected to the bankruptcy administrators hiring the firm, claiming that the law firm's staff had pressured him into filing for bankruptcy in November. However, in late January, a Delaware bankruptcy court judge approved the firm to continue representing FTX.
In early February, Sullivan & Cromwell submitted a bill for $7.5 million for the first 19 days of bankruptcy work after FTX filed in November. The majority of billed time for Quinn Emanuel Urquhart & Sullivan was spent on Asset Analysis and Recovery as well as Avoidance Action – legalese for attempts to undo certain transactions that the debtor engaged in before bankruptcy. As for Landis Rath & Cobb, a significant amount of time was billed for hearings, litigation, and asset disposition.
But that's not all. AlixPartners billed $2.1 million for 2,454 hours of work. Investment bank Perella Weinberg Partners billed $450,000 (its monthly fee), and court documents show that it spent a significant amount of time on developing a restructuring strategy, as well as correspondence with third parties.
According to its billing breakdown, the bank spent a large amount of time working on the sale of FTX assets LedgerX and FTX Japan. In January, a bankruptcy judge gave the sale the green light to create liquidity to pay back creditors.
Last but not least, Alvarez & Marsal billed $12.3 million, the second-largest charge for the month, behind Sullivan & Cromwell. Some of the largest items it billed for were Avoidance Actions, at 3,370 hours, financial analysis, at 1,168 hours, and accounting at 1,106 hours.
In November, shortly after FTX declared bankruptcy, interim CEO John J. Ray III said that the exchange had a "complete failure of corporate controls and such a complete absence of trustworthy financial information." Ray, who also oversaw the liquidation of Enron and Nortel Networks when they collapsed, called the FTX situation "unprecedented".
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Author: Mark Pippen
London News Desk
Breaking Crypto News
