FTX’s bankruptcy costs are approaching $1 billion, making it one of the most expensive Chapter 11 cases in U.S. history.
Court records show that nearly $948 million has been paid to legal and financial firms working on the case, with over $952 million in fees approved so far. Despite the hefty costs, most customers are expected to recover 118% of their claims, a rare outcome in bankruptcy proceedings, according to Bloomberg.
The high fees stem from efforts to recover billions of dollars in assets spread across a complex web of accounts. Lawyers and financial advisers have played a crucial role in this process, with hedge funds that purchased FTX claims at steep discounts among the beneficiaries.
FTX began initial distributions to creditors last week, though legal teams continue to track additional assets.
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Sullivan & Cromwell
FTX’s lead law firm, Sullivan & Cromwell, has been paid over $248 million, while financial adviser Alvarez & Marsal has received approximately $306 million, according to Bloomberg. The firm overseeing customer claims and other creditor matters has charged about $110 million.
Sullivan & Cromwell played a key role in guiding the U.S. Treasury and major financial institutions during the 2008 financial crisis. The firm assisted with JPMorgan Chase’s acquisition of Bear Stearns and the government bailout of AIG.
Additionally, the firm provided legal and financial counsel in the aftermath of the Enron bankruptcy, one of the most significant corporate fraud cases in history.
The FTX case’s costs have far exceeded those of other crypto bankruptcies, including Celsius, Genesis, BlockFi, and Voyager Digital, which together incurred about $502 million in expenses.
The bankruptcy still faces ongoing litigation, including a lawsuit against Binance seeking $1.8 billion.
While FTX’s costs are significant, they remain well below those of Lehman Brothers’ $6 billion bankruptcy—the most expensive in U.S. history, according to Bloomberg.
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