FTX’s US$950 million bankruptcy fees among costliest since Lehman Brothers
The cost of FTX’s bankruptcy is approaching US$1 billion, cementing the implosion of Sam Bankman-Fried’s crypto enterprise as one of costliest Chapter 11 cases in United States history.
Nearly US$948 million was paid to more than a dozen firms hired to work on the bankruptcy through Jan. 2, and more than US$952 million in fees have been approved by the court, records show.
Hefty as it is, that outlay appears to be paying off for the crypto platform’s creditors. Most customers are poised to get back 118 per cent of what they were owed, a rare outcome in the Chapter 11 process, where creditors usually end up getting pennies on the dollar.
The debtholders can thank the throngs of lawyers and financial advisers that have tracked down billions of dollars in digital assets and cash scattered across a byzantine network of accounts, legal experts told Bloomberg News. The beneficiaries include hedge funds that picked up FTX customer claims that traded as low as 10 cents on the dollar after the company collapsed. FTX, which sought protection in November 2022, said last week that it had commenced initial customer distributions.
Lawyers are still sifting through a number of disorganized legal entities under the FTX umbrella, seeking more assets to give to creditors. Some lawsuits related to the fallout remain outstanding, including a complaint against Binance Holdings Ltd. seeking nearly US$1.8 billion.
Court records indicate that the high-profile bankruptcies of crypto players Celsius Network LLC, BlockFi Inc., Genesis Global and Voyager Digital Holdings Inc. cost about US$502 million combined. The ongoing FTX case is nearly double that.
FTX’s lead law firm, Sullivan & Cromwell LLP, has been paid more than US$248.6 million and
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