A law firm representative declined to comment on Kirkland & Ellis’s involvement with two cryptocurrency Chapter 11 bankruptcies, but few in the industry were surprised at the development in mid-July. Chris Ward, Chair of the Bankruptcy and Restructuring Practice at law firm Polsinelli, said, “It does not surprise me at all that they [Kirkland] would want to be on the forefront of the emerging distressed and bankruptcy issues that will come out of the crypto fallout.” The world’s biggest law firm will manage the Chapter 11 process for cryptocurrency companies Voyager Digital Ltd. and Celsius Network LLC.
The lead attorney for both insolvencies is Kirkland partner Joshua Sussberg. New to crypto by his own admission, Sussberg received much of his crypto education from Voyager employees. Still, Sussberg cuts a high profile in the world of large corporate insolvency, having previously served in Chapter 11 cases for Toys ‘R’ Us, JC Penney, and Tailored Brands (owner of Men’s Wearhouse).
Kirkland & Ellis is considered very well positioned to handle such prominent litigation; the firm represented close to half of the large publicly traded companies that filed for bankruptcy during 2020 (based on a Bloomberg Law analysis of a UCLA database). Kirkland employs upwards of 3,000 attorneys and regularly find itself as the world’s top-ranked law firm by revenue.
A sizable share of the work in the two current cases will involve figuring out how to access, let alone disburse, the billions of dollars in customer assets that are tied up on the respective crypto platforms. For starters, little case law exists for how to treat cryptocurrencies in the process of bankruptcy litigation. Crypto hedge fund Three Arrows Capital poses similar headaches for bankruptcy lawyers because the hedge fund’s principals are currently believed to be in hiding.