One of the most expensive issues in history .. This is the cost of FTX bankruptcy

Nearly $ 948 million has been paid for more than 12 consulting companies that have been appointed to work on the bankruptcy case until January 2, and more than $ 952 million has been approved by the court, according to the records.

Despite the magnitude of this spending, it appears to be fruits for the creditors of the encrypted currency platform. Most customers will get 118% of what was worthy of them, which is a rare result in the process of Chapter 11, as the creditors usually end up obtaining a percentage of each dollar they invested.

Legal experts told Bloomberg News that debt holders can thank the crowds of lawyers and financial advisors who tracked billions of dollars of digital assets and scattered criticism through a complex network of accounts. The beneficiaries include the hedge funds that purchased the FTX customer claims that were circulated at less than 10% of their value after the company’s collapse. FTX, who requested protection in November 2022, said last week that it started the initial distributions of customers.

Lawyers are still looking into a number of unorganized legal entities under the FTX umbrella, in search of more assets to provide creditors. Some of the lawsuits related to repercussions are still pending, including a complaint against “Bennes Holdings” seeking approximately $ 1.8 billion.

The court records indicate that the bankruptcy of prominent players in the field of cryptocurrencies such as “Celsius Network”, “BLOCKFI”, “Genesis Global”, and “Voyageer Digital Holdings” cost about $ 502 million combined. The current FTX case is almost twice that.

While the “Sullivan & Cromwell LLP” fee was more than 248.6 million dollars, and the financial advisor “Alvarez Marsal” received nearly 306 million dollars, according to court records. Advisors who represent the interests of FTX and other creditors have imposed a fee of about $ 110.3 million. This is likely to be the most expensive case according to Chapter 11 in the past many years, according to the drawings of the fees submitted by Bankruptcydata.

Jared Elias, a professor of law at Harvard University, who studied the costs of large semester 11, said that the exorbitant cost of the FTX payment plan, which was approved in October, “was to be cheaper” if “the company cost itself the trouble of keeping the books and records, but it did not.”

Elias said that the high cost of FTX bankruptcy comes amid a steady increase in the cost of legal services and other professional services. It seems that the daily bankruptcy cost has increased significantly between 2010 and 2022, and on average, Chapter 11 fees consumed more assets of debtors from companies before bankruptcy, according to research published this month.

Lehman Brothers’s bankruptcy is still the most expensive case under Chapter 11 in history, as it costs nearly 6 billion dollars, according to a 2019 report issued by the Federal Reserve in New York. (Arabic)