FTX also plans to raise money by selling some businesses in the Bahamas, Japan and Europe that may be viable with a capital injection. And the company plans to work with officials in the Bahamas to market the company’s real estate holdings — a total of 36 properties valued at $253 million.
But it’s unclear how much all those assets can be sold for, or how quickly. In short, FTX clients and lenders have yet to brace themselves for a multi-year legal drama before recovering money, and they are likely to incur large losses, experts say.
“It is possible that creditors will have the option of getting digital coins or cash. It depends on what the underlying crypto is,” said Kenneth Marshall, a financial advisor who specializes in working with investors who have fallen victim to failed deals, including those involving crypto. “This can take a long time.”
The latest disclosure about FTX assets has also thrown a spotlight on the work of Sullivan & Cromwell, one of the world’s most prestigious corporate law firms. It not only represents FTX in the bankruptcy, but also did legal work for the exchange before it collapsed.
On Friday, Andrew R. Vara, the United States trustee in the bankruptcy proceedings, filed an objection to FTX’s decision to hire Sullivan & Cromwell, alleging that his pre-bankruptcy work poses a potential conflict of interest. The trustee has also argued for the appointment of an independent investigator to investigate the cases.
The law firm’s bankruptcy work doesn’t come cheap: Billing rates for Sullivan & Cromwell partners range from $1,575 to $2,165 per hour, according to a previous lawsuit.
A Sullivan & Cromwell representative pointed to a lawsuit Tuesday saying the law firm had worked “tirelessly” to recover assets for the company. In a related lawsuit, a company attorney, Andrew Dietderich, defended the company’s previous work for FTX and its ability to conduct an investigation into the events surrounding the stock market’s collapse.
Mr. Dietderich disagreed with Mr. Bankman-Fried’s earlier claim that he had been pressured to bankrupt the company. He said in the filing that Mr. Bankman-Fried tapped restructuring attorney John J. Ray III to replace him as CEO after consulting with his father and three other attorneys.
