Sullivan & Cromwell and Kirkland and Ellis, two significant law firms participating in the court proceedings, have found great financial success from high-profile bankruptcy cases. Major law firms’ bitcoin bankruptcy attorneys and advisors have earned over $700 million in fees from noteworthy cryptocurrency bankruptcy cases.
A number of significant bankruptcy cases have occurred in recent years, including Voyager Digital, Genesis Global Capital, BlockFi, Celsius, and Sam Bankman-Fried’s cryptocurrency exchange, FTX Trading Ltd. Sullivan & Cromwell and Kirkland & Ellis, two significant law firms involved in the court proceedings, have found great financial success in these well-known bankruptcy cases.
The firm most likely to win is Sullivan & Cromwell, which is now handling the lawsuit involving FTX Trading Ltd., Sam Bankman-Fried’s exchange. In November 2022, the cryptocurrency exchange situated in the Bahamas filed for bankruptcy due to a $8 billion imbalance in FTX’s accounts, which was discovered by a spike in customer withdrawals. Reports state that FTX’s bankruptcy has resulted in over $500 million in fees for its advisors and attorneys, with overall expenses skyrocketing.
The administrators of the bankruptcy process have asked for an incredible $700 million in fees and costs. Although a few of these petitions have been cut by twenty percent, others are still pending clearance.
Sullivan & Cromwell, the special counsel for the FTX estate, has been approved for $254 million in fees, despite invoicing $360 million, according to court documents. Alvarez and Marsel, financial advisers, come next with authorised fees totaling $133 million.
A total of $57 million has been charged by other firms and advisers, such as Quinn Emanuel Urquhart and Sullivan, Landis Rath and Cobb, Perella Weinberg Partners, and AlixPartners. The CEO of FTX, John Ray III, has invoiced $5.6 million at an hourly rate of $1,300, while the main officers of RLKS Executive Solutions have billed $26 million. Separately, the Ad Hoc Committee has asked for less than $5 million in fees, while the Official Committee of Unsecured Creditors has incurred $81 million in fees and $1.5 million in expenditures.
A Bloomberg story claims that Kirkland and Ellis has probably made over $120 million in revenue from its position as lead attorney for three significant cryptocurrency exchanges that filed for Chapter 11 at the height of the market’s losses in 2022. Kirkland & Ellis submitted its last fee application for three bankruptcy cases in January.
They requested $76 million for the Celsius case, which is a substantial amount more than the $27 million and $16 million they received from the BlockFi and Voyager cases, respectively. With the Celsius lawsuit accounting for the majority, the firm’s fees for the three suits total $120 million. Celsius filed for bankruptcy in July 2022 following the demise of TerraUSD and its digital currency, Luna.
The bankruptcy filing of Three Arrows Capital, a hedge fund, was followed by that of Voyager Digital in July of 2022. After FTX, with which BlockFi had a $400 million credit line, also filed for bankruptcy, BlockFi filed for bankruptcy in November 2022. The largest year-over-year demand rise in 2023 was recorded by bankruptcy practices (up 4.4%), followed by litigation (up 3.2%). These data are from the Thomson Reuters Institute.