The ongoing FTX bankruptcy saga has resulted in a staggering cost of legal fees, as revealed by recent court filings. In January alone, the total bill for legal work and expenses reached $38 million.
Among the firms involved in the case, Sullivan & Cromwell has emerged as the biggest beneficiary. As the counsel responsible for discovery, asset disposition, and asset analysis/recovery, the firm submitted an invoice for $16.8 million to cover the 14,569 hours of legal work performed in January.
This is a significant improvement for Sullivan & Cromwell, as they had faced the risk of being removed from the case in December.
The Department of Justice objected to FTX hiring the firm claiming a conflict of interest in the proceedings.
Sam Bankman-Fried further posted objections, claiming that law firm staff pressured him into declaring bankruptcy in November 2022.
However, Sullivan & Cromwell received a vote of confidence when in Late January, a Delaware Court ruled they could continue to work on the case.
FTX Saga Legal Bill Stacks Up
Other legal firms were able to scoop smaller mouthfuls out of the pot.
Quinn Emmanuel Urquhart & Sullivan billed $1.4m as the Special Counsel responsible for asset analysis and recovery, alongside avoidance actions.
Meanwhile, Landis Rath & Cobb came away from January with the smallest take, charging only $663,995 for handling hearings, litigation, and asset disposition.
All in all, legal expenses accounted for just shy of $19m (around 50%).
Financial Services Take Second Stage
On the financial side, industry services firm Alvarez & Marsal submitted the largest charge, billing $12.3m for a combined 5,644 hours working on avoidance action, financial analysis, and accounting.
This was followed by AlixPartners, a firm retained on the case to conduct forensic analysis on DeFi products and tokens. They billed $2.1m for 2,454 hours of work.
Finally, investment bank Perella Weinberg Partners continued to charge their monthly fee of $450,000.
Responsible for devising a restructuring strategy, so far, the firm has focused on the sale of LedgerX and FTX to create liquidity for creditors.
Alvarez and Marsal Comprise 68% of FTX Expenses Costs
Collectively the firms billed an additional $325,000 in expenses with almost $20,000 spent on food in January alone.
Alvarez and Marsal were among the biggest spenders and they’re rising to become one of the most expensive components of the case. Representing 68% of the expenses costs for the case, this firm spent $12,347 on meals in January alone.
Overall, Alvarez and Marsal also charged the highest hourly rate of any firm.
As the costs continue to stack up, creditors remain at a loss, and as is all too often in bankruptcy proceedings, the real winners are the representatives, at least for the time being.