According to Bloomberg, FTX The legal costs of the exchange bankruptcy case have approached $1 billion, making it one of the most expensive bankruptcy protection cases in US history. According to records, as of January 2nd, fees paid to over ten companies hired to handle FTX bankruptcy affairs amounted to nearly $948 million, and the total amount of court approved fees has exceeded $952 million.

According to court records, bankruptcy cases of other well-known cryptocurrency companies, such as Celsius, BlockFi, Genesis Global, and Voyager, had a total cost of approximately $502 million, with the FTX bankruptcy case costing almost twice as much.

According to court records, FTX The main law firm Sullivan&Cromwell LLP has received over $248.6 million in compensation, and financial advisor Alvarez&Marsal has also received approximately $306 million in fees. In addition, advisors representing the interests of FTX clients and other creditors collected approximately $110.3 million in fees. According to BankruptyData, this may be the most expensive bankruptcy protection case in recent years.

FTX The bankruptcy reorganization team applied for bankruptcy protection in November 2022 and began repaying customers on February 18th of this year. Although this expenditure is huge, it seems worthwhile for creditors. Most customers expect to recover 118% of their outstanding payments, which is extremely rare as creditors in bankruptcy protection cases can usually only recover a very small portion of the funds.

Legal experts say that these creditors should thank this group of lawyers and financial advisors for tracking and recovering billions of dollars in digital assets and cash scattered across a complex network of accounts, including hedge funds that acquired debt from FTX clients at a price of 10% of the debt value. At present, lawyers are still sorting out multiple chaotic and disorderly legal entities under FTX, trying to find more assets to repay creditors. Some lawsuits related to FTX bankruptcy are still ongoing, including a $1.8 billion recovery case against Binance.

The lack of accounting records and corporate governance has led to an increase in consultant fees

Harvard Law School professor Jared Ellis said, FTX The repayment plan passed in October last year had an astonishing cost. If the company had been willing to keep financial records, the cost should have been lower, but they did not do so. However, Ellis also pointed out that, FTX The high cost of bankruptcy cases occurs against the backdrop of the continuous increase in legal and other professional service costs over the past few years.

FTX John Ray, a restructuring consultant appointed as CEO after the collapse, has stated that in his 40 year career, including guiding the Enron bankruptcy case, he has never seen such a complete failure of corporate control and such completely unreliable financial information. According to court records, Ray's consulting firm has received over $8 million in compensation.

Katherine Stadler, the lawyer responsible for reviewing FTX fees, stated in a 2023 report that the reason why this case is unusually expensive is because FTX (and other similar fintech companies) operate in a financial system that is "largely unregulated" and operates globally, even lacking basic corporate governance. Although Stadler pointed out that the bankruptcy case was "extremely expensive by any standard," she also stated that the performance of professionals was outstanding.

According to a 2019 report by the Federal Reserve Bank of New York, the Lehman Brothers bankruptcy remains the most expensive bankruptcy protection case in history, costing nearly $6 billion. According to Bloomberg earlier this month, the restructuring cost of Puerto Rico's public debt has exceeded $2 billion, making it the most expensive municipal bankruptcy case in US history. Ray Sullivan&Cromwell lawyer James Bromley was also responsible for the bankruptcy case of telecommunications giant Nortel Networks, which cost over $2 billion.