FTX Bankruptcy Incurs Approximately $1B in Expenses, Placing it Among History's Costliest

FTX's bankruptcy expenses are nearing the $1 billion mark, positioning it as one of the most costly Chapter 11 cases in American history.

Legal documents indicate that approximately $948 million has been disbursed to legal and financial firms involved in the case, with more than $952 million in fees already authorized. Despite these substantial expenses, the majority of customers are anticipated to retrieve 118% of their claims, a remarkable result in bankruptcy proceedings, according to Bloomberg.

These exorbitant fees can be attributed to attempts to recoup billions of dollars in assets dispersed across a convoluted network of accounts. Attorneys and financial advisors have been instrumental in this endeavor, with hedge funds that acquired FTX claims at substantial discounts among the recipients of these benefits.

FTX initiated its initial disbursements to creditors last week, although legal teams persist in their pursuit of additional assets.

Sullivan & Cromwell

Sullivan & Cromwell, the leading law firm for FTX, has received over $248 million, while financial consultant Alvarez & Marsal has obtained around $306 million, as reported by Bloomberg. The firm responsible for managing customer claims and other creditor matters has billed about $110 million.

During the 2008 financial crisis, Sullivan & Cromwell played a pivotal role in advising the U.S. Treasury and major financial institutions. The firm contributed to JPMorgan Chase's acquisition of Bear Stearns and the government's bailout of AIG.

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Moreover, the firm offered legal and financial guidance in the aftermath of the Enron bankruptcy, one of the most noteworthy corporate fraud cases in history.

The costs of the FTX case have surpassed those of other cryptocurrency bankruptcies, such as Celsius, Genesis, BlockFi, and Voyager Digital, which together accumulated roughly $502 million in expenses.

The bankruptcy continues to grapple with ongoing litigation, including a lawsuit against Binance seeking $1.8 billion.

Although FTX's expenses are substantial, they remain significantly below those of Lehman Brothers' $6 billion bankruptcy—the most expensive in American history, according to Bloomberg.

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