FTX began paying bankruptcy attorneys months before filing

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Before filing for Chapter 11, FTX secured its bankruptcy counsel with a $12 million retainer, according to court filings. It paid its first payment to the company over three months before filing.

FTX declared bankruptcy on November 11. According to the petition, the first payment of $23,882.50 was made after the retainer was paid on August 26.

Sullivan & Cromwell LLC, the company handling FTX’s reorganization, has already cashed in more than $3.4 million, or approximately 30%, of its retainer as of November 3, 2022.

According to a second filing, FTX has also hired Quinn Emanuel at a maximum hourly salary of $1,917 for partners. Prior to the Chapter 11 petition, $300,000 was paid to attorneys at Landis Rath & Cobb to serve as general bankruptcy co-counsel.

According to court documents, John Ray, the new leader of FTX designated to oversee the exchange’s reconstruction, is charging $1,300 per hour for his services.

Ray spoke to legislators earlier this month about what he knows so far concerning the collapse of the exchange.

During the hearing, Ray said, “What was originally released to the public occurred around November 2, but this started months, if not years before.” “Investigations are ongoing… “However, this did not transpire overnight.”

Ray said that FTX’s restructuring team had secured over $1 billion in assets, which are now being kept in cold storage for security by custodian Fireblocks. The team believes that recovering other assets would take “weeks, if not months.”

Ray noted that the bulk of FTX’s creditors were customers of FTX.com, Bankman-main Fried’s worldwide exchange situated in the Bahamas, and was not from the United States.

The FTX collapse and accompanying fraud are “worse than Enron,” according to a seasoned insolvency specialist, largely because FTX’s management system was so poorly structured. In 2007, Ray handled the collapse of the commodities and services behemoth.

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