Kirkland Nets $120 Million in Celsius, BlockFi, Voyager Work

Kirkland & Ellis is poised to earn more than $120 million for its work as lead counsel to three major crypto exchanges that filed Chapter 11 cases during the height of cryptocurrency losses in 2022.

The law firm represented BlockFi Inc., Celsius Network LLC and Voyager Digital Holdings Inc., which filed bankruptcy cases between June and November in 2022. New York-based partner Joshua Sussberg led Kirkland’s representations in all three cases.

Kirkland’s final fee application in the three cases was filed Thursday in the Celsius case, and the firm requested $76 million. The request dwarfs Kirkland’s bills for the other two cases, which are already wrapped up. Kirkland earned more than $27 million in the Voyager case and $16 million in the BlockFi case.

For the world’s largest law firm by revenue, winning the cutting-edge crypto jobs helped cement its reputation as the leading corporate restructuring law firm. But crypto holders whose assets were caught up in the cases have criticized the size of the fees, which have so far been approved by judges.

Prior to the fallout of crypto exchanges, Kirkland amassed a record market share of more than 40% of major Chapter 11 filings in 2020, when the pandemic and business closures lit the fuse for the busiest bankruptcy year since the Great Financial Crisis.

The Celsius case, filed in November 2022, has led to fee requests by major law firms totaling nearly $145 million. The failed crypto lender in November won court approval for a bankruptcy exit that will see the company start up a creditor-owned Bitcoin mining operation.

The case was complicated by an investigation into its former chief executive officer, Alex Mashinsky, who was charged in July by federal prosecutors for allegedly manipulating the company’s self-issued token. He’s pleaded not guilty and is facing a trial date later this year.

White & Case submitted a final fee request of more than $50 million for its work on behalf of unsecured creditors—largely Celsius’ customers whose crypto assets were stock on the exchange. The law firm helped investigate Celsius’ pre-bankruptcy business, including Mashinsky’s conduct, it said in its fee request.

Latham & Watkins is seeking $12.3 million for its work as special litigation counsel for Celsius. The firm said it represented the company in more than 20 separate U.S. regulatory and criminal investigations, including by the US Attorney’s Office for the Southern District of New York, the US Securities and Exchange Commission, the Commodity Futures Trading Commission, the Federal Trade Commission, and 19 regulatory bodies of at least 17 states.

Akin Gump Strauss Hauer & Feld submitted a fee request of $6.1 million for its work as special litigation counsel to Celsius. The firm, in part, reached a settlement with a counterparty that resulted in the return of crypto tokens worth more than $105 million to Celsius, it said in its fee request.

The portion of the Celsius case that requires court-approved fees is over, but Kirkland and White & Case said they had incurred further fees that would be paid outside of the bankruptcy process.

“Ending the $20-million-a-month ‘burn rate’ of professional fees in the case has been the focus of the principals and professionals of both the Debtors and the Committee for many months, especially as these cases neared their conclusion,” Kirkland wrote in its request for fees.

While Kirkland earned the lead roles on the earliest crypto exchange Chapter 11 filings, the largest such case, FTX, is led by Sullivan & Cromwell.

Kirkland’s Sussberg also pitched his services to represent the creditors committee in that case but lost out to Paul Hastings.