[ad_1]
Excessive-profile bankruptcies involving crypto change FTX, hedge fund Three Arrows Capital and crypto lenders BlockFi, Celsius Network and Voyager Digital Ltd are producing new alternatives – and large charges – for legislation corporations that counsel troubled firms.
Massive legislation corporations can rake in additional than $100 million in authorized charges throughout a long-running chapter, consultants mentioned. “You have to pay the gravedigger,” mentioned Adam Levitin, a legislation professor at Georgetown College who focuses on chapter legislation. “These are sophisticated circumstances with a bunch of novel points, and it should not be stunning that they will require a variety of lawyer involvement.”
The worth of bitcoin has dropped 65% up to now this 12 months, dragging down different crypto belongings and leaving buyers reeling. The spectacular implosion of FTX final month despatched contemporary shock waves via the cryptocurrency trade.
One U.S. legislation agency, Kirkland & Ellis, is representing BlockFi in its chapter case filed on Monday and can also be lead counsel for Celsius Community and Voyager Digital, which each filed for chapter earlier this 12 months.
Kirkland instructions a few of the highest billing charges within the trade, charging as much as $1,995 per hour for work by its companions on the Celsius and Voyager circumstances, based on court docket filings. The agency, which didn’t reply to a request for remark, has billed a median of about $3.3 million each month in every of these circumstances up to now.
Legislation agency billing charges are usually not public, however in chapter circumstances attorneys for the debtor firm should element their billings and request a choose’s approval for his or her charges.
The attorneys are paid from the belongings of a chapter property, and consultants mentioned judges not often demand vital reductions in skilled charges.
“Kirkland is dominant in massive public firm bankruptcies already, and that is simply extending to a brand new space of chapter,” mentioned Lynn LoPucki, a legislation professor on the University of Florida who has studied bankruptcies and company restructuring. “In the event that they dominate crypto, it would maintain them on the high.”
Amongst its bigger current circumstances, Kirkland earned $83 million in authorized charges and reimbursements for its work within the long-running chapter of satellite tv for pc companies supplier Intelsat, billing greater than 87,000 hours, court docket filings present.
Kirkland accomplice Joshua Sussberg is lead counsel in all three of the agency’s crypto-related bankruptcies. He has been concerned in lots of main company bankruptcies lately, together with for movie show chain Cineworld Group and J.C. Penney Co Inc.
COMPLEX QUESTIONS
Wall Road agency Sullivan & Cromwell is chapter counsel for FTX. The agency has not but revealed its charges, however in a 2021 case involving Kumtor Gold Firm, the agency’s companions billed as much as $1,825 per hour.
Sullivan & Cromwell can also be representing buying and selling agency Alameda Analysis, based by FTX founder Sam Bankman-Fried, as a creditor within the Celsius and Voyager bankruptcies. The legislation agency didn’t reply to a request for remark.
As crypto bankruptcies mount, the legislation agency with the very best most billing charge disclosed up to now is Latham & Watkins, which is advising Celsius on regulatory points and is debtor’s counsel to Three Arrows Capital. Its high charge is $2,075 an hour, based on court docket papers. Latham additionally didn’t reply to a request for remark.
The cryptocurrency circumstances are notably vital for legislation agency chapter practices as Chapter 11 filings set off by the COVID-19 pandemic and the struggles of big-box retailers have begun to gradual, authorized consultants mentioned. Crises inside sure industries, similar to cryptocurrency, can maintain enterprise flowing and supply years of regular income.
Attorneys within the crypto circumstances should cope with a number of points new to chapter legislation, together with whether or not digital belongings deposited on a platform are owned by the shopper or the platform itself, based on chapter legislation consultants. That willpower might assist resolve how a lot of their deposit a buyer is more likely to recoup from a bankrupt agency.
Levitin, a former member of the restructuring division at legislation agency Weil, Gotshal, & Manges, mentioned such complicated questions name for top-shelf attorneys.
“In any other case it turns into only a seize race the place it is the most important and most refined collectors grabbing all the pieces for themselves,” he mentioned.
[ad_2]
Source link