FTX Collapse Leaves Few Winners, Law Firms and Consultants to Untangle Mess

• FTX’s collapse has left few winners, with the exception of the many law firms and consultants that will have to untangle the mess left by founder Sam Bankman-Fried.
• Court filings detail the fees charged by lawyers, tax advisors, restructuring specialists and the company’s new senior management.
• FTX’s New York-based law firm Sullivan & Cromwell charges as much as $2,165 an hour for work by partners and special counsel, while financial advisors Alvarez and Marsel charge an hourly rate of as much as $1,375.

The collapse of FTX crypto exchange has left few winners, with its founder Sam Bankman-Fried in FBI custody and his senior lieutenants cutting deals with prosecutors. As many as one million creditors are still waiting to get their money back, but one group is definitely set to gain – the many law firms and consultants that will have to untangle the mess left by Bankman-Fried.

Court filings issued on Wednesday detail the terms under which FTX’s partners will be reimbursed for their efforts. The filings show that FTX’s New York-based law firm Sullivan & Cromwell (S&C) charges as much as $2,165 an hour for work by partners and special counsel. S&C was appointed to lead the winding up of the company on November 9th, and received some $3.4 million from FTX in the three months prior to its collapse, most of which was paid on November 3rd. Meanwhile, financial advisors Alvarez and Marsel charge an hourly rate of as much as $1,375 and received $4 million in retainers prior to the bankruptcy.

The court filings also detail the fees charged by the company’s own new senior management, including John J. Ray III, who took over from Bankman-Fried as chief executive officer on November 11th. Ray, via his company Owl Hill, charges a similar hourly rate. Upon completion of the Chapter 11 bankruptcy plan he will get a further $3 million bonus. Fellow law firm Landis Rath and Cobb, has been hired to represent a representative committee of nine FTX creditors. The filings also reveal that West Realm Shires, the subsidiary of FTX that owned the U.S. business, paid a $12 million retainer at S&C before West Realm filed for bankruptcy on November 14th.

The law firms and consultants now have the arduous task of untangling the mess left by FTX’s collapse. Whether they will be successful in helping creditors get their money back, and whether the law firms will be able to recoup their own fees, remains to be seen.

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