FTX Bankruptcy Team to Rake in Millions from the Case
- Bankruptcy Judge John Dorsey recently dismissed calls for Sullivan & Cromwell to be withdrawn from the FTX case due to their past affiliation.
- Sullivan & Cromwell could rake in hundreds of millions of dollars in legal fees for representing FTX.
According to a Bloomberg Law report, legal firm Sullivan & Cromwell is set to rake in a fortune from handling FTX’s bankruptcy case. The crypto exchange filed for bankruptcy in November and has relied on the legal services of Sullivan & Cromwell to untangle its finances.
Bloomberg Law predicts that Sullivan & Cromwell’s legal fees will climb to hundreds of millions before the bankruptcy case is over. The legal firm has about eight months to sort out FTX’s bankruptcy and has over 150 people working on the case, including 30 partners earning more than $2,000 per hour. The report states that some associates bill up to $1,500 per hour.
In November alone, more than 100 Sullivan & Cromwell attorneys from the bankruptcy, regulatory, and litigation offices put in at least 10 hours working on the FTX case. The team also included 25 partners with an hourly rate of $2,165. Interestingly, John Ray, the restructuring guru chosen to replace disgraced CEO Bankman-Fried, charges $1,300 per hour.
Sullivan & Cromwell claimed in a court declaration that its estimated costs are in line with market rates charged by other top legal firms and also reflect a discount from the rates charged in non-bankruptcy situations.
FTX is not the only crypto firm that has forked out millions in legal fees. Crypto firms have increased their demand for bankruptcy experts as crypto firms such as Celsius, Voyager, and Genesis have filed for bankruptcy.
Law bankruptcy is not as lucrative as private equity work, but some cases often generate months or years of work and help build profits, especially during bear markets. For example, the law firm Weil Gotshal made roughly $500 million from the bankruptcy of Lehman Brothers following the 2008 financial crisis. In 2019, Kirkland & Ellis received a payment of almost $56 million for the 15 months they spent working on the Toys “R” Us bankruptcy.
FTX has been advised by Sullivan & Cromwell since it filed for bankruptcy. However, two creditors and a former top FTX attorney claimed Sullivan & Cromwell should be withdrawn from the suit due to its history with FTX and its association with Ryne Miller, the general counsel of FTX US. However, US bankruptcy judge John Dorsey ruled in a hearing on January 20 that there is “no evidence of a real conflict,” allowing the firm to maintain its position.
Lawrence has covered some exciting stories in his career as a journalist, he finds blockchain-related stories very intriguing. He believes Web3 will change the world and wants everyone to be a part of it.
