Key Points:
$1.5 million in legal costs every day, the FTX bankruptcy is draining.
Creditors are constantly criticizing the current level of spending because it will become a deficit they do not receive in compensation.
Hundreds of lawyers, financial advisors, and bankers worked nearly full-time as the bankruptcy was surprisingly complex, with connections to other massive crypto companies.
According to Coindesk, the legal costs used for the FTX bankruptcy of up to $1.5 million per day are becoming a concern for creditors.
Rising costs were a point of contention at Wednesday‘s bankruptcy hearing when a creditor’s committee criticized current spending levels. According to attorney Kris Hansen, representing FTX‘s creditor committee, FTX’s monthly legal costs have reached nearly $50 million, with an average daily fee of $1.5 million.
“They‘ve now moved to a pace of almost $50 million a month in fees, with literally hundreds of lawyers, financial advisors and bankers working on them practically full time(…). Every dollar spent in the case is essentially a dollar that don’t receive.”
Kris Hansen, a lawyer from Paul Hastings representing the debt committee, said.
The complex bankruptcy included negotiations with other collapsed crypto giants and resolved the troubles of FTX‘s former management. Take, for example, the recent agreement with Genesis that FTX’s Alameda Research can claim $175 million in that companys bankruptcy. Besides, managing many holes under Sam Bankman-Fried also consumed much time and money.
Amid discussions about possibly creating FTX 2.0, the creditor committee also argued that the debtor group should maximize profits from the companys cash and crypto assets throughout the case.
FTX faces about 1 million potential creditors in bankruptcy proceedings, including former customers, suppliers, and lenders, who will have to compete with each other for priority in receiving repayments from the companys remaining assets.