Crypto Gets a Visit From the Behemoth of Bankruptcy Law

It didn’t take long for Kirkland & Ellis to stake its claim to the cascade of legal work sure to flow from crypto’s worsening collapse. 

The white-shoe law firm is guiding both Voyager Digital Ltd.Celsius Network LLC through first-of-its-kind bankruptcies. The crypto lenders filed for Chapter 11 protection this month amid a plunge in the value of the digital tokens and a selloff across the broader market.

For Kirkland, the work will likely be as difficult as it is plentiful: billions of dollars of customer assets are tied up on the platforms and little existing case law speaks to how cryptocurrencies should be treated in bankruptcy. Lawyers will also need to recover as much money as possible from Three Arrows Capital, the beleaguered crypto hedge fund whose principals are currently nowhere to be found

“Kirkland & Ellis is considered the go-to firm for distressed borrowers and Chapter 11 debtors,” said Chris Ward, chair of the bankruptcy and restructuring practice at law firm Polsinelli. “It does not surprise me at all that they would want to be on the forefront of the emerging distressed and bankruptcy issues that will come out of the crypto fallout.” 

A representative for Kirkland & Ellis declined to comment on its recent crypto engagements.

Kirkland is well known in restructuring circles for representing high-profile, deeply troubled enterprises in need of rehabilitation. In 2020, when the Covid-19 pandemic spurred the big insolvencies in a decade, the firm represented more than 40% of large publicly-traded companies that filed for bankruptcy, according to a Bloomberg Law analysis of a UCLA database. 

The firm is massive: it has more than 3,000 attorneys in its FOLD and consistently ranks as the world’s biggest law firm by revenue. Some restructuring partners charge more than $1,500 an hour for their time, according to bankruptcy court records.

Joshua Sussberg, a partner at Kirkland, is the lead bankruptcy lawyer for both Voyager and Celsius. The charismatic barrister is a mainstay in the world of large corporate failures, particularly retailers: he held prominent roles in the Chapter 11 cases of Toys ‘R’ UsJC Penney and Tailored Brands, the owner of Men’s Wearhouse. 

Sussberg is, by his own admission, new to crypto. He’d heard about it from friends and family but “couldn’t wrap [his] head around it,” he told US Bankruptcy Judge Michael Wiles in a hearing last week. Voyager employees brought him up to speed, he said. 

“If you think you’re new to cryptocurrency, you’re a seasoned veteran compared to me,” Wiles, who is overseeing Voyager’s Chapter 11 case, told him later in the hearing.