WeWork and Rite Aid Bankruptcies Yield $42 Million for Kirkland

Christmas appears to have come early for Kirkland & Ellis.

The law firm, perennially one of the highest-grossing in Big Law and fresh off naming its largest-ever partnership class, filed court papers last week detailing $41.5 million in retainer payments it received on behalf of bankrupt clients Rite Aid Corp. and WeWork Inc.

SmileDirectClub Inc., another insolvent company advised by Kirkland, also disclosed last month it paid $2.5 million to the firm.

Kirkland, known for its large tier of nonequity partners, disclosed last month that seven of its 205 new partners come from its lucrative restructuring practice. That group made headlines last year for its work representing several cryptocurrency companies that filed for Chapter 11 protection.

Distressed companies frequently turn to Kirkland for turnaround work that requires large teams of lawyers navigating complex legal and financial issues. Kirkland didn’t respond to a comment request about its work for WeWork and Rite Aid, whose bankruptcy billables are broken down below.

WeWork Inc.

Kirkland disclosed in a Nov. 20 application for employment in WeWork’s bankruptcy that it was paid a $1 million retainer on Sept. 13. The firm subsequently received special purpose retainers totaling $21 million, according to the submission from Kirkland restructuring partner Steven Serajeddini.

In August, WeWork hired Kirkland and added former top Milbank bankruptcy partner Paul Aronzon to its board. Kirkland lawyers are billing between $685 and $2,245 per hour. WeWork is hoping to use the bankruptcy process to shed and renegotiate leases, although some landlords are fighting back.

WeWork, which filed for bankruptcy in early November after promoting Pamela Swidler to its top legal job this year, is also being advised by lawyers from Munger, Tolles & Olson; Cole Schotz; and Canada’s Goodmans.

Munger Tolles received a $250,000 retainer payment from WeWork on Oct. 30 and an additional $884,000 on Nov. 1, per a court filing in the case. The firm, which is serving as special counsel to WeWork, submitted Nov. 5 an invoice for nearly $1.1 million in fees to draw down nearly the entirety of its retainer payments. Munger Tolles lawyers are billing between $765 to $2,245 per hour.

Cole Schotz, which is serving as local counsel to WeWork in its Chapter 11 case in Newark, N.J., was paid more than $211,000 in the 90 days prior to the co-working company’s bankruptcy. Cole Schotz currently holds a retainer of nearly $939,000, according to a court filing in the case. Cole Schotz lawyers are billing between $375 to $1,475 per hour for their services.

Rite Aid Corp.

Kirkland disclosed in a Nov. 22 application for employment in Rite Aid’s Chapter 11 case that it received an initial $500,000 retainer on May 3 and subsequent special purpose retainers totaling $19 million from the pharmacy chain, which went bankrupt last month. Kirkland lawyers have the same hourly rates in Rite Aid’s bankruptcy as they do for WeWork.

Rite Aid has also retained Cole Schotz as co-counsel for its Chapter 11 case in Trenton, N.J., with Wilson Sonsini Goodrich & Rosati and Kobre & Kim representing the company’s board. Cole Schotz, whose lawyers have the same billing rates as in the WeWork case, in the 90 days prior to Rite Aid’s insolvency received about $412,000 from the company. Cole Schotz currently holds a roughly $783,000 retainer from Rite Aid, according to a court filing.

Wilson Sonsini has received $2.2 million in advance retainers from Rite Aid and its lawyers are billing the debtor between $615 and $2,475 per hour as special counsel to its board, per a court filing. Kobre & Kim stated in court papers that it’s received nearly $800,000 since late July representing a group of Rite Aid directors. Kobre & Kim lawyers are billing between $950 and $2,000 per hour.

Rite Aid, which hired a new top lawyer earlier this year in Thomas Sabatino, a veteran law department leader, is facing a March 1 deadline to complete its turnaround and emerge from Chapter 11. The company has also parted ways with a pair of Big Law firms that had personal ties to former Rite Aid executives.