The law firms representing BlockFi, a failed crypto lender, have earned a staggering $21 million in fees for their work in the Chapter 11 proceedings, which involved complex and unprecedented legal issues.
BlockFi, a cryptocurrency lending platform that offered high-interest loans and deposits, filed for Chapter 11 bankruptcy protection in July 2023 after suffering massive losses due to the market crash in May. According to its bankruptcy petition, BlockFi had over $1.6 billion in liabilities and only $1.1 billion in assets.
BlockFi’s creditors included several crypto firms, such as Binance, Coinbase, Gemini, and Bitfinex, as well as individual investors and lenders.
The law firms representing BlockFi in the bankruptcy case have received a huge compensation package for their services, totaling $21 million in fees and expenses.
The main law firm, Kirkland & Ellis, acting as co-counsels to the debtor, got $19.8 million, while the local law firm, Cole Schotz P.C., got $1.1 million. The financial adviser, Moelis & Company LLC, got $4.4 million. The fees and expenses covered August 1 to November 28, 2023.
U.S. Bankruptcy Judge Michael B. Kaplan approved the fees and expenses and ruled that they were “reasonable and necessary” for the case, which involved “significant legal issues, many of which are complex and matters of first impression.” The fees and expenses were also reviewed and recommended by the fee examiner, Elise S. Frejka, who did not object to any of the applications.
The law firms justified their fees and expenses by arguing that they had “accomplished a great deal” in the case, such as negotiating a bankruptcy plan, reaching settlements with multiple crypto firms, and resolving various disputes and claims.
BlockFi’s bankruptcy plan was approved by Judge Kaplan in September 2023 after receiving overwhelming support from the creditors. The plan outlined a detailed wind-down of the estate, which included distributing the remaining assets to the creditors, liquidating the crypto holdings, and resolving the outstanding claims and lawsuits.
The bankruptcy plan also provided for the creation of a liquidation trust, which would oversee the final administration of the estate and pursue any potential recoveries or litigation. It aimed to maximize the estate’s value and provide fair and equitable treatment to all the creditors.
