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Crypto meltdown a boon for U.S. bankruptcy lawyers

Crypto meltdown a boon for U.S. bankruptcy lawyers

The value of bitcoin has dropped 65 per cent so far this year, and large law firms can rake in more than $100 million in legal fees during a long-running bankruptcy, experts say.

Publishing date:

Dec 03, 2022  •  5 days ago  •  3 minute read

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Representations of virtual cryptocurrencies are placed on U.S. dollar banknotes in this illustration taken Nov. 28.
Representations of virtual cryptocurrencies are placed on U.S. dollar banknotes in this illustration taken Nov. 28. Photo by DADO RUVIC /REUTERS

Turmoil in the cryptocurrency industry has rattled major exchanges and sent the value of digital assets tumbling, but at least one group stands to gain: bankruptcy lawyers.

High-profile bankruptcies involving crypto exchange FTX, hedge fund Three Arrows Capital and crypto lenders BlockFi, Celsius Network and Voyager Digital Ltd are generating new opportunities – and big fees – for law firms that counsel troubled companies.

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December 9, 2022 by ATTORNEY

Crypto meltdown a boon for bankruptcy lawyers

Dec 2 (Reuters) – Turmoil in the cryptocurrency industry has rattled major exchanges and sent the value of digital assets tumbling, but at least one group stands to gain: bankruptcy lawyers.

High-profile bankruptcies involving crypto exchange FTX, hedge fund Three Arrows Capital and crypto lenders BlockFi, Celsius Network and Voyager Digital Ltd are generating new opportunities – and big fees – for law firms that counsel troubled companies.

Large law firms can rake in more than $100 million in legal fees during a long-running bankruptcy, experts said.

“You’ve got to pay the gravedigger,” said Adam Levitin, a law professor at Georgetown University who specializes in bankruptcy law. “These are complicated cases with a bunch of novel issues, and it shouldn’t be surprising that they are going to require a lot of attorney involvement.”

The value of bitcoin has dropped 65% so far this year, dragging down other crypto assets and leaving investors reeling. The spectacular implosion of FTX last month sent fresh shock waves through the cryptocurrency industry.

One U.S. law firm, Kirkland & Ellis, is representing BlockFi in its bankruptcy case filed on Monday and is also lead counsel for Celsius Network and Voyager Digital, which both filed

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December 4, 2022 by ATTORNEY

Lawyers for Celsius investors file motion to have interests represented in court

An international law firm representing groups of Celsius investors has filed a motion to appoint a committee to represent their interests in the crypto lending firm’s bankruptcy case.

In a Thursday filing with the U.S. Bankruptcy Court in the Southern District of New York, lawyers with the law firm Milbank requested the appointment of an “Official Preferred Equity Committee” to represent certain Celsius shareholders. According to the filing, the equity holders “urgently require their own fiduciary” for representation in court alongside Celsius debtors and an Unsecured Creditors Committee, or UCC.

“The need for a fiduciary to pursue the Equity Holders’ interests is particularly critical when one considers the practical realities of these cases: There are only two groups of real economic stakeholders — the retail customers and the Equity Holders,” said the court filing. “Not only is the UCC laser focused on maximizing value for the customers, without regard for the Equity Holders, but the Debtors also have made it abundantly clear that the UCC is their partner, and these cases are ‘all about the customer.’”

The legal team added:

“An estate fiduciary is needed to take the other side of this dispute before a plan of reorganization is

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September 25, 2022 by ATTORNEY

U.S. Treasury gives green light to Russian default insurance payouts

WASHINGTON (Reuters) -The U.S. Treasury issued a special waiver on Friday to allow investors with insurance against a Russian default, known as Credit Default Swaps, to receive their payouts.

The normally straightforward process of CDS payouts was thrown into chaos in June when Washington said its sanctions on Russia represented a total ban on buying Moscow’s debt.

An investor who buys a CDS contract usually hands over the underlying bond to the bank or fund that sold them the CDS when a default happens. It traditionally involves an auction to determine the price, but under the sanctions that exchange effectively became illegal.

The license authorizes U.S. persons to purchase or receive Russian bonds starting two days before the announced date of the auction, and up to eight business days after the auction takes place.

The committee that sets the auction date has a scheduled meeting on Monday at 1300 GMT after having met three times this week.

“OFAC has issued two General Licenses (waivers) to help U.S. and other global investors more cleanly exit their exposures to Russia,” a Treasury spokesperson said, referring to the Office of Foreign Assets Control which enforces U.S. sanctions.

The move also authorizes financial

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July 30, 2022 by INSURANCE

Chris Pettit spent $250K in the 40 days after filing bankruptcy

Ex-San Antonio attorney Christopher “Chris” Pettit, accused of stealing his clients’ money, spent more than $250,000 in the 40 days after he filed for bankruptcy.

The spending is detailed in court exhibits that are part of the Chapter 11 trustee’s motion seeking an order directing Pettit to show why he should not be held in contempt for withdrawing $125,000 from his retirement account after filing for bankruptcy June 1.

Pettit, 55, transferred the retirement money into checking and savings accounts at Martha’s Vineyard Bank in Massachusetts. The court exhibits show he spent just shy of $252,000 from those accounts from June 2 through July 11.

“It may be consistent with his pre-bankruptcy lifestyle,” said San Antonio attorney Martin Seidler, who represents creditors in the case.

Pettit listed $27.8 million in assets and $115.2 million in debts in his personal bankruptcy, one of the largest ever filed in San Antonio. His law firm also filed.

On ExpressNews.com: ‘A big no-no’: Ex-San Antonio attorney Chris Pettit allegedly took $125,000 from retirement account

The trustee — the court-appointed private attorney overseeing the assets — has said the retirement money should not be touched until the court rules it’s exempt from the bankruptcy estate.

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July 28, 2022 by ATTORNEY
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