TechFlow news — On January 8, according to Cryptoslate, FTX creditor Lidia Favario filed a lawsuit with Judge John Dorsey, accusing the bankruptcy management team of excessive spending. Court documents reveal that professionals from law firm Sullivan & Cromwell and financial advisory firm Alvarez & Marsal (A&M) significantly exceeded the U.S. Department of Justice (DOJ) guidelines for hotel and transportation expenses.
Disclosures show the bankruptcy team incurred lavish expenditures, including stays at five-star hotels such as Hotel Du Pont in Delaware and luxury accommodations in New York costing $971.74 per night, as well as bookings at high-end resort properties like the Hyatt Grand Reserve in Nassau. Regarding transportation, A&M professional Kumaman Ramanathan spent as much as $1,733 on taxi fares in a single week during November 2022. Another professional paid $151.33 for a mere five-minute ride from Hotel Du Pont to the courthouse. Additionally, $2,683 was spent on taxi waiting fees for three vehicles while awaiting FTX CEO John Ray’s testimony completion, and business-class airfares reached up to $4,279 per trip.
In her complaint, Favario emphasized that given the substantial losses suffered by numerous creditors due to the FTX collapse, these expenditures reflect serious disregard for creditor funds by the bankruptcy management team. She urged the court to expand scrutiny of expenses to ensure compliance with DOJ guidelines and uphold fairness in the bankruptcy process. Meanwhile, creditor Sunil Kavuri warned of phishing emails targeting FTX creditors, advising them to obtain information only through official channels. FTX repayments are expected to begin in March 2025.
