FTX Bankruptcy Special Counsel, Advisers Bill $38M for January
FTX’s bankruptcy proceeding has teams of lawyers, investment bankers, consultants and financial advisers working on the case.
The army of professionals working on the FTX bankruptcy case has billed a collective $38 million plus expenses for the month of January, according to court records.
Bankruptcy administrators have retained law firm Sullivan & Cromwell as counsel. They have also retained Quinn Emmanuel Urquhart & Sullivan as well as Landis Rath & Cobb to act as special counsel for the proceedings.
Consultancy AlixPartners was retained to primarily conduct forensic analysis on decentralized finance (DeFi) products and tokens in FTX’s possession.
Meanwhile, the financial services firms Alvarez & Marsal as well as Perella Weinberg Partners were retained to sort through FTX’s accounting records and determine which assets it can 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 nonlawyer staff such as paralegals.
Court filings show Sullivan & Cromwell lawyers and staff billed a total of 14,569 hours for January. The largest project Sullivan & Cromwell worked on was discovery, followed by asset disposition and asset analysis and recovery.
Initially the U.S. Department of Justice had objected to FTX hiring Sullivan & Cromwell, claiming potential conflicts of interest. Former CEO Sam Bankman-Fried also objected to bankruptcy administrators hiring the firm, claiming that the law firm's staff had pressured him into filing for bankruptcy protection in November. In late January the firm was approved by a U.S. bankruptcy court judge in Delaware to continue to represent 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.
For Landis Rath & Cobb, a significant amount of time was billed for hearings, litigation and asset disposition.
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 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 in order to create liquidity to pay back creditors.
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, CEO John J. Ray III said the crypto exchange had a “complete failure of corporate controls and such a complete absence of trustworthy financial information.”
Ray, who oversaw the liquidation of Enron and Nortel Networks, called the FTX situation “unprecedented” and something he had never seen in his career.
Ray, for his part, submitted a bill for $305,565 for his work during the month of February.
CORRECTION (March 7, 2023 15:35 UTC): Fixes the title of John J. Ray III.
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