I have to say the headline that FTX is costing $1.3 million a day or $53,000 an hour sure is an eye-catching and concerning headline. When I ran across the headline while I was at the airport at 4:30 AM waiting for my flight to go back home for the first time in the year I couldn't help but think this was a little fishy so I dove on into it to see what was going on. It did not take long at all to start running into what I would call "red flags" about what the title infers. 

I am not a lawyer but working for Congress means that I deal with them all the time and in more ways than I would have thought companies in, about to be in, or exiting bankruptcy. Of the limited things I knew was that in bankruptcy all of the payments to lawyers, vendors, people, etc. have to be approved by the court. However, I did want to check that out and luckily enough it is easy to find and according to the laws on the books:

Bankruptcy Rule 2017 authorized the court to review and approve or disapprove the fees charged by attorneys. 

Clearly, then this means that the courts would have had to approve these extremely high fees something that the people and companies owed money would surely push back on. 

It wasn't until the end of the article that this was addressed and I have to say that it was done in a way that I believe misled people but was designed to appear transparent. The author does note that the court-appointed fee examiner has already flagged these and previous filings by the law firms. For the law firms, she did the worst-case scenario as she labeled the billing submissions as a "significant area of concern" pointing to the the law firms asking for the most. In the previous period from May 1 to June 31 fee examiner Katherine Stadler wrote to the court about Alvarez & Marshall: 

“The Fee Examiner identified apparently top-heavy staffing, apparently excessive meeting attendance, fees related to non-working travel time, and various technical and procedural deficiencies with respect to some time entries (including vague and lumped entries),”

This is a pretty brutal court document smackdown but one that shows that still the courts are trying to help push back against these law firms who if they had their way would end up draining FTX of their funds before money was returned to investors and customers. With Alvarez & Marshall having submitted the largest bill for the last 3 months at $35.8 million I think it stands to show that they will not be getting this amount. The title while eye-catching sadly terribly misleads the people who see it or just read the first couple of paragraphs.  

Authors, bloggers, and media overall need to be held to a higher standard. The courts are clearly not going to let them drain away FTX and even the fee examiner is now publically on the record of calling out these law firms for more or less trying to leech the FTX bankruptcy. That is not to say that bankruptcy will be cheap by any means or that it will be quick. As we have seen SBF did a heck of a job in creating a tangled mess that to most people does not make much sense and crosses jurisdictions left and right. It is important that we highlight and applaud the wins that we can get and this court pushback is another example of just that!

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