FTX ranks among the top Chapter 11 cases in the USA because its bankruptcy expenses now total almost $1 billion. A review of court documents proves legal and financial firms handling the case got $948 million while other documents show $952 million accepted as their payment.
The majority of FTX’s customers will receive a return of 118% on their claims which is unusual in bankruptcies according to Bloomberg data. Searching for and returning billions of dollars from multiple bank accounts requires high financial costs.
Legal and financial experts helped the process succeed as buying FTX claims at low sale prices made some hedge funds earn significant profits. FTX launched initial payments to its creditors last week but the legal teams remain engaged in finding new asset opportunities.
FTX Creditors Await Resolution
Based on Bloomberg data Sullivan & Cromwell received $248 million in fees and Alvarez & Marsal earned $306 million for their financial guidance to FTX. The company that handles customer claims and creditor affairs has collected around 110 million dollars in fees.
Through their long-standing experience Sullivan & Cromwell assisted US Treasury departments and top financial institutions during the economic collapse of 2008. JPMorgan Chase and the U.S. government recruited the firm to guide Bear Stearns’s acquisition and AIG’s bailout respectively. The company participated in many aspects of Enron bankruptcy proceedings which represented one of the biggest corporate fraud cases of its time.
FTX bankruptcy expenses have risen higher than the combined expenses of four other notable crypto failures which added up to $502 million in legal and financial spending. Several legal fights continue to affect the case and Binance faces a $1.8 billion claim in its ongoing lawsuit.
The expenses from FTX’s bankruptcy come to less than half of the $6 billion Lehman Brothers paid during its record-breaking collapse in US history. Even though FTX remains costly compared to other major bankruptcies, its legal spending keeps rising and shows why this case is so difficult to handle. The extensive financial mess created by Sam Bankman-Fried’s assets demands intensive legal services and financial investigations which push costs toward new heights.
The ongoing bankruptcy proceedings challenge everyone by asking what changes crypto will face in the future. FTX’s bankruptcy process exposes system flaws that let it fall apart while showing increasing government attention towards digital asset companies. To many people relief came first from the FTX customer fund recovery rate yet we still don’t know what the FTX bankruptcy case will do to crypto rules.
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