FTX's legal counsel requested insurers to advance or reimburse Bankman-Fried's defense costs and fees under the company's directors and officers insurance.
Sam Bankman-Fried is seeking to use FTX's insurance policies to cover his legal expenses, according to a court filing on March 15.
The former FTX CEO's legal counsel requested in a motion to permit insurers to advance or reimburse his defense costs and fees under directors and officers (D&O) insurance policies held with Relm Insurance and Beazley Insurance. As per the filing, the policies provide "priority of payment to individual insureds with un-indemnified loss like Mr. Bankman-Fried.” Meaning the former CEO would be on top of the FTX payout list. The filing read, in part:
"Based on the foregoing, Mr. Bankman-Fried submits that ample cause exists to lift and modify the automatic stay [...] to allow Relm and Beazley to (a) reimburse Mr. Bankman-Fried for covered Defense Costs that have already been incurred under the D&O Policies, and (b) advance future covered Defense Costs unless and until the Defense Costs no longer qualify as Non-Indemnifiable Losses under the terms of the D&O."
According to Investopedia, directors and officers liability insurance intends to "protect individuals from personal losses if they are sued as a result of serving as a director or an officer of a business or other type of organization," including covering legal fees and other costs as a result of a suit.
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Responses or objections to the motion must be filed by March 29, 2023. If required, a hearing will be held on April 12, 2023, at the United States Bankruptcy Court for the District of Delaware. If no responses or objections are filed, Bankman-Fried asks the court to grant the relief request without further notice.
Bankman-Fried's counsel noted that "there are multiple criminal, regulatory, insolvency-related and civil actions" involving the former CEO, including one criminal proceeding, three federal and state regulatory proceedings, and five insolvency-related proceedings, as well as seven legal actions.
On Feb. 23, Bankman-Fried was charged on four new criminal counts by a federal judge presiding over his case, totaling 12 criminal charges against him, including eight conspiracy charges related to fraud as well as four charges of wire fraud and securities fraud. His legal costs are estimated to be in the nine-figure range.
Cointelegraph previously reported that law firms, investment banks and consulting companies working with FTX on its bankruptcy case billed the crypto exchange a combined $34.18 million in January. FTX’s chief restructuring officer and new CEO, John J. Ray III, also received a substantial salary, charging $1,300 an hour, amounting to a total of $305,000.
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