Crypto gets a visit from the bankruptcy law juggernaut

0

It didn’t take long to Kirkland and Ellis to assert its claim on the cascade of legal work that will certainly arise from the worsening crypto meltdown.

The law firm in white shoes guides both Voyager Digital Ltd. and Celsius Network LLC thanks to one-of-a-kind bankruptcies. Crypto lenders have filed a request Chapter 11 Protection this month amid a drop in the value of digital tokens and a sell-off across the entire market.

For Kirkland, the work is likely to be as difficult as it is abundant: billions of dollars of client assets are tied up on the platforms and little existing case law explains how cryptocurrencies should be treated in the event of bankruptcy. The lawyers will also have to recover as much money as possible from Capital of the Three Arrowsthe embattled crypto hedge fund whose executives are currently not found.

“Kirkland & Ellis is considered the go-to company for distressed borrowers and Chapter 11 debtors,” said Neighborhood Chrispresident of the bankruptcy and restructuring practice of a law firm Polsinelli. “It doesn’t surprise me at all that they want to be at the forefront of the emerging distress and bankruptcy issues that will arise from the crypto fallout.”

A representative for Kirkland & Ellis declined to comment on its recent crypto engagements.

Kirkland is well known in restructuring circles for representing prominent and deeply troubled companies in need of rehabilitation. In 2020, when the Covid-19 pandemic boosted the more major insolvencies in a decade, the company accounted for more than 40% of large publicly traded companies that filed for bankruptcy, according to a Bloomberg Law analysis of a UCLA database.

The firm is massive: it has more than 3,000 lawyers in its fold and regularly ranks as the largest law firm in the world in terms of turnover. Some restructuring partners charge more than $1,500 an hour for their time, bankruptcy court says recordings.

Joshua Sussberg, a Kirkland partner, is lead bankruptcy counsel for Voyager and Celsius. The charismatic lawyer is a mainstay in the world of corporate bankruptcies, particularly of retailers: he has held leading roles in Chapter 11 cases of toys r us, JC Penneyand Tailored Brands, owner of Men’s Wearhouse.

Sussberg is, by his own admission, new to crypto. He had heard about it from friends and family, but “couldn’t conclude [his] shop around,” he told the U.S. bankruptcy judge Michael Wiles in ahearing last week. Voyager employees briefed him, he said.

“If you think you’re new to cryptocurrency, you’re a seasoned veteran compared to me,” Wiles, who oversees Voyager’s Chapter 11 case, told her later in the hearing.

To contact the reporter on this story:
Jeremy Hill in New York at [email protected]

To contact the editors responsible for this story:
Claire Boston at [email protected]

Taryana Odayar

© 2022 Bloomberg LP All rights reserved. Used with permission.

Share.

Comments are closed.