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Hourly Billing in FTX Bankruptcy Already At Historically High Level

By Ellen Bardash
April 01, 2023

Attorneys and consultants involved in the FTX bankruptcy have asked the District of Delaware bankruptcy court to approve billed hours and expenses totaling just under $37 million for the first six weeks of Chapter 11 proceedings.

Those proposed fee applications, the last of which was filed Feb. 27, cover both the FTX debtor entities and the committee representing creditors, with the largest segment by far being the $25.1 million billed by FTX lead counsel Sullivan & Cromwell across two filings. See, https://bit.ly/42upM3Q; https://bit.ly/3ZfryTw. Those fees haven't been approved or denied and could end up differing from the amount attorneys actually are paid.

"In bankruptcy, either the estate is paying these fees as administrative expenses — they come before any unsecured creditors get paid, and they're paid from a diffuse source: unrestricted funds — or the funds are coming out of a carve-out of a secured creditor's collateral," said Nancy Rapoport, a professor at the University of Nevada, Las Vegas' law school who has served as a fee examiner in bankruptcy proceedings for Caesars Entertainment and Toys R Us. "So there's not the same relationship between what work gets billed and whose budget pays for it as there is in a normal attorney-client relationship. If someone else is paying for the fees, there's less of a 'watch the budget' push. That's where the court comes in, and the United States Trustee, and a fee examiner, if and when one is approved."

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