Former United States Securities and Exchange Commission (SEC) official John Reed Stark suggested that FTX’s restructuring plan could be a way for the legal team to profit from the bankruptcy process. In a post on social media platform X, Stark said that considering the significant profits made by all FTX customers during the bankruptcy proceedings, they should receive a sarcastic thank you note from the dissolved exchange’s legal team.
Prominent Figure Comments on FTX Situation
John Reed Stark also sarcastically stated that each member of the legal team could buy a new house with the profits made in 2024. At a hearing on January 31 in the U.S. Bankruptcy Court for the District of Delaware, FTX attorney Andy Dietderich from the law firm Sullivan & Cromwell stated that despite intense efforts, there were no plans to restart FTX under Chapter 11 bankruptcy.
Stark predicted that the chances of success for FTX’s restructuring plan under Chapter 11 bankruptcy were low. He likened the restructuring of FTX to trying to reorganize a combination of Murder Incorporated, The Cali Drug Cartel, and Madoff Investment Advisory Services.
Noteworthy Details About FTX
The lawyers and restructuring team managing FTX billed over $200 million from November 2022 to June 2023. The fees were deemed reasonable by the court-appointed fee examiner Katherine Stadler and were evaluated as not completely irrational in a report filed on June 20, 2023.
However, according to the latest compensation filings, FTX spent approximately $53,000 per hour on legal and consulting fees for the quarter ending October 31, 2023. Documents from December 5 to December 16, 2023, revealed that the bankruptcy legal team billed at least $118.1 million between August 1 and October 31, 2023, spending an average of $1.3 million per day or $53,300 per hour over 92 days.
On February 1, FTX filed a request in a Delaware court to sell its $175 million claim against the bankrupt Genesis Global Capital. The related hedge fund Alameda Research owned the claim. If the request is granted, FTX will be able to sell all or part of its claim and set the timing of the sale to the most favorable conditions.
FTX declared bankruptcy in November 2022 after irregularities were discovered in its accounts. At that time, Genesis had $175 million in its FTX account, which it stated did not affect its market-making activities.
