The wind-up of crypto exchange FTX is set to be “very expensive by any measure” with professional fees already amounting to over $200 million, a court-appointed examiner said in a filing made on Tuesday.
Katherine Stadler, a bankruptcy attorney appointed in March to check fees, said lawyers and other professionals had already racked up nearly 35,000 billable hours, equivalent to four solid person-years of work, by the end of January.
“These proceedings appear on track to be very expensive by any measure,” said Stadler, citing costs that already amount to 2% of estate assets and 10% of reported cash, with 46 of the 242 attorneys assigned to the case charged over $2,000 an hour.
"What makes these cases extraordinary… is the largely unregulated financial system in which the Debtors (and other similar financial technology companies) operate,” she said, citing the “nonexistence of even the most basic corporate governance” at Sam Bankman-Fried’s exchange, a description which echoes criticism leveled by new CEO John J Ray III.
“Very few firms could have accomplished what these professionals accomplished in 90 days…transforming a smoldering heap of wreckage into a functioning Chapter 11 debtor-in-possession,” Stadler said, describing the period immediately following the declaration of bankruptcy as “an ‘all hands on deck’ crisis.”
While broadly content, Stadler called for some of the fees to be slashed, and she asked lead counsel Sullivan & Cromwell to reduce its $42 million bill by some $650,000, for deficiencies such as overstaffing, excessive meetings and vague paperwork.
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