FTX creditors are looking to expedite bankruptcy proceedings as legal fees are becoming increasingly expensive, possibly eating into the money paid to creditors.
While attorneys of FTX are working towards recovering what remains of the once global crypto exchange and repaying customers, creditors have grown frustrated with the lengthy bankruptcy process and are seeking to hasten mediation.
According to a Reuters article on Aug. 23, the agreement was to repay users by liquidating FTX’s assets. However, creditors are displeased about the crypto exchange’s slow negotiation pace to get a buyer that would restart FTX, according to the firm’s attorney, Brian Glueckstein.
Meanwhile, Glueckstein, at a bankruptcy hearing on Aug. 23, argued that a “premature mediation” will benefit anyone while stating that bankruptcy proceedings are still on track to finalize by Q2 2024.
Another issue was the amount that was being gulped in legal fees. According to Kris Hansen, an attorney representing the official creditors’ committee, attorney fees and other costs have climbed to nearly $50 million monthly.
It potentially reduces the money creditors receive as the process continues to drag. In a report filed by court-appointed fee examiner Katherine Stadler in June, FTX incurred about $200 million in legal and advisory costs in seven months.
Hansen further argued that FTX has been secretive with information on interested bids, stating that the debtors have treated members of the creditors’ committee with “misplaced mistrust” and are trying to prevent them from speaking with prospective bidders.
FTX co-founder and former CEO Sam Bankman-Fried, who is at the Metropolitan Detention Center in Brooklyn, pleaded not guilty to fraud and conspiracy charges in a fresh indictment.
Bankman-Fried’s lawyer also recently argued that jail authorities failed to provide the meal requirement of the former crypto mogul and refused access to his medication.
