FTX logo on laptop screen.
Andrey Rudakov | Bloomberg via Getty Images
FTX’s top bankruptcy, legal and financial advisors have paid the company more than $19.6 million in fees for work it performed through 2022, according to a bankruptcy court filing Tuesday. More than $10 million of that is for work to be completed in November 2022, as Sam Bankman-Fried’s crypto empire enters bankruptcy protection in Delaware.
The company was initially paid just over $15.5 million, or 80% of the value of its work, under a court-ordered interim compensation plan.
The law firms that bill FTX are Sullivan & Cromwell, Landis Rath & Cobb, and Quinn Emanuel Urquhart & Sullivan. Professional advisors Alvarez & Marsal and financial advisors AlixPartners also billed the company.
Some of the work the company does is to meet with other companies that also bill FTX for their time, or engage with former and current executives, including Caroline Ellison, former CEO of the Bankman-Fried hedge fund, Alameda Research.
Landis Rath & Cobb and Sullivan & Cromwell, FTX’s lead law firm, paid the combined firm $10.7 million for more than 8,400 hours of work. Landis Rath & Cobb billed $1.16 million for work done between November 11 and November 30.
Sullivan & Cromwell, the target for both parliamentarians and Bankman-Fried regarding pre-petition work with FTX, is seeking compensation of more than $9.5 million for more than 6,500 billable hours, in the period between November 12 and November 30. Over a third of those billable hours, totaling over $4.8 million, were for the work of partners, who usually charge the highest hourly rates.
Sullivan & Cromwell assigned more than two dozen partners to the FTX case, according to the filing. Jim Bromley, a partner in Sullivan & Cromwell and the lead attorney in the case, billed over 178 hours for the week between November 12 and November 30.
The legal filing provides a glimpse into the ferocious work that advisers are doing to untangle FTX’s complicated web accounts and inconsistent accounting standards. Sullivan & Cromwell attorneys spent more than 1,900 hours in November alone on work related to analyzing and recovering FTX’s global asset base, according to the filing.
Alvarez & Marsal, an advisory firm, paid $1.9 million for more than 2,300 hours of work on “business operations,” meetings with lawyers, FTX executives, analyzing FTX holdings using blockchain explorers, and examining “cybersecurity scenarios.” The operation included several hours in November corresponding with and calling Ellison, 5.3 hours on one day of imaging iPad files and other electronic devices, and a first-day hearing conference call that lasted 2.5 hours.
Quinn Emanuel, who paid more than $ 1.5 million for the work done between November and December, assigned over a dozen lawyers to the case, nine of which were partners. One of those partners, Sascha Rand, paid more than $13,000 for a day’s work in November, matching and reviewing the first day’s issues. Quinn’s other lawyers filed more than $17,000 in “non-working” day trips from November 21, returning on November 22.
AlixPartners, a financial consulting firm, paid $1.1 million for work done over a month, from November 28 to December 31.
FTX advisors have not received their full fees. In an interim compensation order, the professional adviser is paid 80% of the fees submitted, if there is no objection. Full compensation for legal and advisory fees will not occur until the final fee application is filed, when the FTX bankruptcy saga ends.
However, that doesn’t mean the advisor won’t get a loan. A 2019 Federal Reserve study said that professional and consulting fees in the bankruptcy of Lehman Brothers were more than $2.56 billion.
Sullivan & Cromwell attorneys did $40,000 worth of work just to appear at FTX’s first bankruptcy hearing on November 22, based on court filings regarding billable hours and hourly rates.
