FTX Bankruptcy Special Counsel Demands $38M for Services in January

A group of lawyers and legal advisors handling the bankruptcy of the troubled crypto exchange FTX after its collapse last year has jointly demanded $38 million as payment for their services in January 2023. 

The exchange hired some of the prestigious law firms in America, such as Sullivan & Cromwell, Quinn Emmanuel Urquhart & Sullivan, and Landis Rath & Cobb, as special counsels and advisors to navigate its chapter 11 bankruptcy proceedings. 

SBF Objected to Hiring Sullivan & Cromwell

Initially, the disgraced FTX co-founder Sam Bankman-Fried (SBF) objected to the bankruptcy administrators retaining Sullivan & Cromwell as its counsel, stating that the firm pressured him into filing for bankruptcy soon after the company’s liquidity crisis, knowing that the case would involve hefty legal fees. 

In January, a federal judge granted the proposal to allow Sullivan & Cromwell to continue representing the firm after disclosing it had resolved a potential conflict of interest. 

Before that, SBF filed a motion in December seeking to pay the company’s partners and special counsel $1,575 and $2,165 per hour for their work, respectively, a figure far above the recommended billing rate approved by the court for bankruptcy attorneys. 

More Than 180 Lawyers Assigned to FTX Case

According to a court document, Sullivan & Cromwell charged the exchange $16.8 million for 14,569 hours of work in January.

The funds will be shared with the company’s lawyers, paralegals and other staff helping with the case. Per the court document, the New York-based law firm focused on discovery, asset disposition, analysis, and recovery.

Like Sullivan & Cromwell, Quinn Emanuel Urquhart & Sullivan charged FTX $1.4 million, while the third law firm, Landis Rath & Cobb, billed $663,995 for their services. 

The document also showed that most of the billed time for Quinn Emanuel Urquhart & Sullivan was spent on asset analysis, recovery, and avoidance action. 

The American-based law firms had more than 180 lawyers assigned to the case and over 50 non-lawyer employees, including paralegals working on the bankruptcy proceedings. 

Meanwhile, Sullivan & Cromwell submitted a bill in February, charging the company $7.5 million for the first 19 days it worked on the bankruptcy case after its collapse. 

The law firm also received $8.5 million from FTX before officially filing for bankruptcy on November 11. The funds were payments for the company’s services in a potential acquisition of Voyager Digital, which the court has now awarded to its rival Binance following its liquidity crunch.