• FTX creditors are looking to expedite bankruptcy proceedings due to costly legal fees possibly eating into money paid to creditors.
• The agreement is to repay users by liquidating FTX’s assets, but creditors are unhappy with the slow negotiation pace.
• Attorney fees and other costs have climbed to nearly $50 million monthly, potentially reducing the money creditors receive as the process drags on.
FTX Bankruptcy: Nearly $50 Million in Legal Fees
FTX’s creditors are attempting to speed up its bankruptcy proceedings as legal fees continue to mount, possibly decreasing what customers receive from the reparations. Attorneys for FTX are working towards recovering what remains of the once global crypto exchange and paying back customers, yet customers have grown dissatisfied with the length of time it is taking for a resolution.
Agreement To Repay By Liquidating Assets
According to a Reuters article on Aug. 23, the plan is for FTX to repay users by liquidating its assets. However, those involved in the process are not thrilled with how slowly negotiations have progressed in order for an investor or buyer that could restart FTX operations. Brian Glueckstein, an attorney for FTX argued against “premature mediation” during a hearing on Aug 23rd while still aiming for completion by Q2 2024.
Growing Legal Expenses
Kris Hansen, an attorney representing FTX’s official creditors’ committee mentioned that legal costs amounting to almost $50 million each month have become increasingly expensive and this could reduce payments due for creditors as well as prolong proceedings further. In June 2021 court-appointed fee examiner Katherine Stadler reported that in seven months alone legal and advisory expenses were around $200 million dollars thus far. According to Hansen, there has been reluctance from debtors when it comes sharing information about interested bidders which has caused mistrust among members of the creditor’s committee who wish speak with prospective buyers themselves.
Former CEO On Fraud Charges
Sam Bankman-Fried who co-founded and served as CEO of FTX was recently indicted on fraud and conspiracy charges which he pleaded not guilty too at his hearing at Metropolitan Detention Center in Brooklyn.. His lawyer also pointed out that jail authorities had failed provide him with meals according plan he was prescribed nor did they give access medication he needed .
FTX’s bankruptcy proceedings have posed several issues such as legal expenses becoming increasingly expensive or former CEO Sam Bankman-Fried’s indictment on fraud charges yet all parties involved hope that a resolution will be made soon so users can be repaid their dues accordingly without any more delays or complications .