Bankruptcy of FTX Incurs Over $200 Million in Legal Fees

An independent auditor has examined the legal fees incurred during the initial months of FTX’s bankruptcy, revealing a staggering amount exceeding $200 million. The auditor justifies these significant fees, considering the monumental nature of the task at hand.

Katherine Stadler, the court-appointed fee examiner, submitted a comprehensive report on June 20, analyzing the fees charged by law firms over a three-month period following FTX’s bankruptcy filing on November 11. Stadler concluded that these fees were reasonably justified during this period.

Stadler emphasized the unique circumstances surrounding FTX’s operations within a largely unregulated financial system. She highlighted the remarkable global scope of the case, the absence of corporate records, and the lack of basic corporate governance, making it an exceptional scenario.

Confirming that the team responsible for FTX’s bankruptcy had requested more than $200 million in fees since November, Stadler praised their prompt and effective efforts in turning around what she described as a “smoldering heap of wreckage.”

The breakdown of fees in Stadler’s report shed light on the charges imposed by law firms during the initial weeks of FTX’s Chapter 11 bankruptcy filing. It revealed that the 242 lawyers involved in the case billed hourly rates ranging from $388 to $2,165. Notably, 46 lawyers were billing at rates surpassing $2,000 per hour.

Given the complex nature of FTX’s bankruptcy proceedings and the immense challenges faced by the legal team, the substantial fees incurred can be deemed justified. As the proceedings continue, there will likely be further scrutiny and evaluation of these fees.


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Celsius Network Charged Over $3M in Legal Fees

Beleaguered crypto lending platform Celsius Network has incurred more than $3 million in legal fees, according to a filing shared on Friday. 


The bankruptcy proceedings, which have been costly for Celsius Network, is an understatement, and per the filing, law firm Kirkland and Ellis is charging the company the sum of $2.6 million in fees for representing it in its bankruptcy proceedings from July 13 and July 31.

The company was also charged the sum of $750,000 in fees by Akin Gump for its services between July 13 and August 31.

These massive legal fees give a peak into the costs being incurred by crypto companies that have gone bankrupt, including Voyager Digital, Babel Finance, Vauld Group, and Zipmex. While the industry is filled with these bankruptcy cases, Celsius Network stands out as it was the first firm to halt withdrawals on its platform.

Alex Mashinsky, the company’s founder and former CEO, and his team allegedly ran the company to bankruptcy, with the Wall Street Journal noting that the firm operated a higher risk profile than most traditional banks did. 

At present, Celsius Network has been exploring avenues to repay its creditors following its bankruptcy with as many as $2.8 billion in crypto liabilities. For the company to have an amicable settlement where the restructuring or liquidation is favourable to the majority of its creditors, it will still need to incur the services of experts that can help navigate its restructuring process.

As a flagship bankrupt crypto lending firm, the company is neck deep in its proceedings, and according to reports, it may suffer as much as a $40 million deficit according to projections by Kirkland & Ellis. 

The crypto winter has taken out many crypto giants, and what proponents in the space are now looking for now is how the affected companies will bankroll their bankruptcy proceedings with highly cushioned funds.

Image source: Shutterstock


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