©Health & Fitness Journal. FTX’s logo is seen at the entrance to FTX Arena in Miami, Florida, the United States, November 12, 2022. REUTERS/Marco Bello 2/2
By Dietrich Knauth and Andrew Goudsward
(Health & Fitness Journal) – Bankrupt crypto exchange FTX has asked a U.S. bankruptcy judge for permission to pay its best restructuring attorneys up to $2,165 an hour, an unusually high rate for a company that can’t afford all of its own repay debt.
FTX declared bankruptcy on November 11 and collapsed amid a wave of client withdrawals. Federal prosecutors have accused founder Sam Bankman-Fried of stealing billions of dollars in FTX client assets to offset losses at his hedge fund Alameda Research, and two of his former employees have already pleaded guilty. Bankman-Fried is scheduled to be indicted in New York on Thursday.
New York-based law firm Sullivan & Cromwell is representing FTX in its Chapter 11 case and leading its efforts to return assets to clients. FTX late Wednesday asked the Delaware federal judge overseeing the case for permission to pay the firm’s partners and special counsel between $1,575 and $2,165 an hour for their work.
Rates from the top attorneys far exceed the $1,300 an hour charged by new FTX CEO John Ray, who also filed a filing with the court late Wednesday.
Court-approved bankruptcy attorney rates broke the $2,000-per-hour mark earlier this year when a US bankruptcy judge approved a $2,035-per-hour fee in the bankruptcy of cosmetics giant Revlon.
Bankruptcy experts have said that total legal fees in a case as complex as FTX can exceed $100 million.
Bankman-Fried criticized Sullivan & Cromwell in draft testimony before Congress he planned to give before his December 12 arrest, alleging that he was pressured, at least in part, into filing for bankruptcy because the case would involve high legal fees would.
Sullivan & Cromwell did not immediately respond to a request for comment.
Prior to FTX’s bankruptcy, Sullivan & Cromwell represented the company in US regulatory investigations and potential acquisitions, including its proposed acquisition of bankrupt crypto lender Voyager Digital. The firm was paid $8.56 million for this pre-bankruptcy legal work.