New FTX CEO Paid $1,300 an Hour, Court Filings Show

Other execs are billing $975 per hour, but the fees pale in comparison to the typical overall costs of corporate restructuring.

AccessTimeIconNov 21, 2022 at 11:09 a.m. UTC
Updated Nov 22, 2022 at 8:28 p.m. UTC

Jack Schickler is a CoinDesk reporter focused on crypto regulations, based in Brussels, Belgium. He doesn’t own any crypto.

John Ray, a seasoned expert brought in to tidy up the wreckage of collapsed crypto exchange FTX, is billing $1,300 per hour for his work, court documents filed on Sunday show.

Restructuring experts are seeking to carry on paying senior staff wages, despite a freeze on company funds and a lack of clear records about who is owed what. Legal documents filed over the weekend at the U.S. Bankruptcy Court for the District of Delaware ahead of the first hearing on Tuesday shed more light on the insolvency proceedings.

FTX’s fortunes collapsed rapidly following a Nov. 2 revelation by CoinDesk that the company had blurred the lines with supposedly independent trading arm Alameda Research. The exchange may have left as many as 1 million creditors, including crypto users who have been unable to withdraw funds from their accounts.

The continued payment of salaries “is necessary for the preservation of the resources and value" of the FTX estate, said the filing by Edgar Mosley, managing director at restructuring consultancy Alvarez & Marsal.

“Without it, I believe that even more employees may seek alternative employment opportunities … likely, diminishing stakeholder confidence in the debtors’ ability to successfully reorganize," he said.

Payments made to Ray – as well as those made at a rate of $975 per hour to Chief Administrative Officer Kathryn Schultea, Chief Financial Officer Mary Cilia and Chief Information Officer Raj Perubhatla – are “critical to maintaining and administering" what remains of the company as it tries to unwind its debts in an orderly way, Mosley said.

The filing also cites non-employee directors hired to ensure proper governance during the insolvency process. Those directors are charging a fee of $50,000 per month plus expenses.

Though eye catching, the fees may be small potatoes in the pricey world of corporate restructuring. In the low millions per year, Ray’s salary would represent just a fraction of the $3.1 billion FTX owes to its principal creditors, the $2 billion it cost to unwind Lehman Brothers, as reported in 2010, or the $21 billion that Ray’s predecessor Sam Bankman-Fried could at one time claim as his personal fortune.

Mosley also recommends continuing to pay as much as $17.5 million to critical contractors. Without the contractors, the company could see crypto assets hacked or stolen. The assets, then, could end up being beyond the reach of the bankruptcy court.

But determining who are the key suppliers is complicated because of FTX’s cavalier attitude to record-keeping. Ray has criticized the exchange's records as the worst he’s ever seen in his 40-year restructuring career, including for the failed energy company Enron.

FTX is still having trouble identifying who was on its payroll, complicating efforts to pay as much as $1 million in back pay. Ray has also criticized practices such as FTX purchasing Bahamas real estate for staff using company funds.

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Jack Schickler is a CoinDesk reporter focused on crypto regulations, based in Brussels, Belgium. He doesn’t own any crypto.

CoinDesk - Unknown

Jack Schickler is a CoinDesk reporter focused on crypto regulations, based in Brussels, Belgium. He doesn’t own any crypto.