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FTX Bankruptcy Costs Approach $1 Billion, Among the Highest in U.S. History
The collapse of FTX has led to a staggering $1 billion in bankruptcy costs, making it one of the most expensive Chapter 11 cases in the United States. According to recent court records, nearly $948 million has been paid to legal and financial firms working on the case, with over $952 million in fees already approved.
Recovery Expectations and Fees
Despite the substantial costs, most customers are expected to recover 118% of their claims, a rare outcome in bankruptcy proceedings. The high fees are attributed to the complex and extensive efforts to recover billions of dollars in assets scattered across various 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, while legal teams continue to track additional assets.
Breakdown of Fees
Sullivan & Cromwell, FTX’s lead law firm, has received over $248 million, while financial adviser Alvarez & Marsal has received approximately $306 million. The firm overseeing customer claims and other creditor matters has charged about $110 million.
Sullivan & Cromwell’s expertise in navigating complex financial situations has been instrumental in guiding the U.S. Treasury and major financial institutions during the 2008 financial crisis.
The firm’s experience in handling high-profile cases, such as the Enron bankruptcy, has been invaluable in the FTX case.
Comparison to Other Crypto Bankruptcies
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.
Ongoing Litigation and Recovery
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.
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