John Ray, a seasoned expert brought in to clean up the wreckage of collapsed crypto exchange FTX, is billing $1,300 an hour for his work, court documents filed Sunday show.
Restructuring experts are trying to keep paying senior staff wages despite a freeze on corporate funds and a lack of clear data on who owes what. Legal documents filed this weekend in the US Bankruptcy Court for the District of Delaware ahead of Tuesday’s first hearing shed more light on the insolvency proceedings.
FTX’s fortunes quickly collapsed after a November 2 revelation from CoinDesk that the company had blurred boundaries with the supposedly independent trading arm Alameda Research. The exchange may have left behind as many as 1 million creditors, including crypto users who have been unable to withdraw funds from their accounts.
The continued payment of salaries “is necessary to preserve the resources and value” of the FTX estate, according to the filing from Edgar Mosley, general manager of restructuring consultancy Alvarez & Marsal.
“Without this, I think even more workers will look for alternative employment opportunities… probably, reducing stakeholder confidence in the debtors’ ability to successfully reorganize,” he said.
Payments to Ray — as well as payments of $975 per hour to Chief Administrative Officer Kathryn Schultea, Chief Financial Officer Mary Cilia, and Chief Information Officer Raj Perubhatla — are “critical to maintaining and managing” what remains of the company as it tries to be pay off debts in an orderly fashion, Mosley said.
The filing also names non-employees hired to ensure good governance during the insolvency process. Those directors charge a fee of $50,000 per month plus expenses.
While eye-catching, the fees can be small potatoes in the expensive world of corporate restructuring. In the low millions a year, Ray’s salary would represent only a fraction of the $3.1 billion FTX owes to its major creditors, the $2 billion it took to dissolve Lehman Brothers as reported in 2010, or the $ 21 billion that Ray’s predecessor Sam Bankman-Fried could once claim on his personal fortune.
Mosley also recommends continuing to pay as much as $17.5 million to critical contractors. Without the contractors, the company could see crypto assets being hacked or stolen. The assets could then ultimately be beyond the reach of the bankruptcy court.
But determining who the main suppliers are is complicated because of FTX’s cavalier attitude to record keeping. Ray has criticized the stock market’s records as the worst he’s ever seen in his 40-year restructuring career, including for failed energy company Enron.
FTX is still struggling to identify who was on payroll, complicating efforts to pay as much as $1 million in back wages. Ray has also criticized practices such as FTX purchasing property in the Bahamas for staff using corporate funds.
Read more: New FTX Boss Condemns Management of the Crypto Exchange During Sam Bankman-Fried’s Tenure