Four high-profile law firms are on the verge of reaping $40 million in fees in relation to the bankruptcy case of cryptocurrency exchange, BlockFi Inc. The lawyers had filed a request for these fees after finalizing a plan to liquidate the company.
BlockFi experienced financial woes following the FTX crash last year that left the company with more liabilities than it could handle. Among the firms looking to be paid the biggest fee share is Kirkland & Ellis. The established law firm asked for a final fee amounting to more than $16 million for the services they provided in the bankruptcy case.
Law firm Haynes Boone, which represented BlockFi from the initial stages of its Chapter 11 filing in November 2022, has requested payment of over $12.5 million in fees according to a recent filing.
Another firm, Brown Rudnick, also representing BlockFi, has sought more than $10.5 million in fees while local counsel Cole Schotz has requested close to $1 million. The BlockFi case gained liquidation plan approval in October and is among several crypto exchange bankruptcies keeping ‘Big Law’ firms busy in recent times.
Kirkland has also represented two more major crypto players, Celsius Network LLC and Voyager Digital Holdings Inc., in their bankruptcy cases. For the Voyager case, which gained approval for a liquidation plan in May, the firm billed over $27 million. Celsius Network, approved to morph into a creditor-owned Bitcoin mining entity last month, has seen Kirkland bill an impressive $60 million in fees through to August, based on an analysis of court records by Bloomberg Law.
FTX Trading Ltd’s ongoing Chapter 11 filing is represented by Sullivan & Cromwell which, in September, applied for $32 million in fees for work done between May and July.
Kirkland’s work for BlockFi pursued an investigation into whether its estate should litigate, settle, release, or simply retain potential causes of action against company insiders. The firm presented a 170-page report in July recommending claims against insiders be settled in exchange for cash and a commitment that they assist the company with litigation against accused parties in BlockFi’s collapse, including FTX and hedge fund Three Arrows Capital.
Last October, BlockFi agreed to mediate a dispute regarding whether the failed exchange of Sam Bankman-Fried owed the company over $1 billion. Although legal releases were contested during the bankruptcy proceedings, a liquidation plan was secured following a settlement with creditors and after overcoming challenges from the US Justice Department’s bankruptcy watchdog.