FTX CEO John Ray is relying on the same core group of three people during at least three bankruptcies in the previous decades to sort through the company's jumbled books and sloppy recordkeeping.
FTX is paying them millions of dollars to untangle the mess.
A Massive Pay
Ray and his senior crew are the new management team of FTX, who are experienced and independent contractors.
They are not like average workers that work directly for the corporation, as they are hired to engage in the bankruptcy processes of the defunct crypto firm.
As per CNBC's report, they will be receiving payment without delay, ahead of any FTX investors who are due compensation for their losses.
According to court records, the new FTX CEO will get $1,300 per hour plus "reasonable expenses" for his efforts unraveling what US Attorney Damian Williams dubbed "one of the biggest frauds in American history."
Therefore, if Ray works a regular 40-hour workday for 50 weeks per year, with two weeks of unpaid vacation, his yearly salary would be $2.6 million.
Ray charged around 156 hours over two months on a bankruptcy case he worked on, earning him about $120,582. His billings for FTX might be more or less than that.
In comparison, Ray earned a relatively modest $1.2 million on an annual basis when he led Enron through its own fraud recovery process in 2005. Like in FTX, Ray served as chairman and CEO of the energy business through part of its bankruptcy.
The Bankruptcy Officers
Together with his close-knit group, Ray has been involved in reorganizing three different companies that have filed for bankruptcy in the previous three decades: Enron in the early 2000s, Nortel in 2009, and Overseas Shipbuilding Group in 2014.
Apart from Ray, these insolvency consultants include Chief Operating Officer Kathryn Schultea, Chief Financial Officer Mary Cilia, and Chief Information Officer Raj Perubhatla.
The other three managers are provided by RLKS Executive Solutions, a firm that specializes in deploying contract bankruptcy officers at a rate of $975 per hour, or $5.85 million per year.
In order to rebuild what Ray has termed "an utter failure of corporate controls at every level," the executives from RLKS are in charge of administrative, financial, and information technology activities.
The total hourly rate for all four bankruptcy officers is $4,225 or $8.45 million per year.
FTX Updates
Bahamian authorities detained FTX founder and former CEO Sam Bankman-Fried on federal accusations. The Bahamas Police arrested him at his apartment complex in Albany, Nassau, for numerous financial offenses under US and Bahamas law.
Bankman-Fried is accused of defrauding investors by redirecting their money to a hedge fund he controlled, leading to criminal charges in New York and claims from the US Securities and Exchange Commission (SEC).
Bankman-Fried has been indicted by a grand jury in the Southern District of New York on eight counts.
For specifics, Bankman-Fried is accused of conspiring to defraud FTX clients by abusing their money to pay Alameda Research's bills. Apparently, he runs the Alameda Research crypto hedge fund.
The petition says wire fraud against creditors and customers started in 2019 and lasted until 2022.
Moreover, he allegedly offered Alameda an almost infinite line of credit funded by its customers and exempted it from FTC risk-mitigating regulations.
