BlockFi Bankruptcy: Another Big Pay Day for Law Firms

BlockFi bankruptcy has finally winded down and in the wake of this reality, its four big law firms that made up the company’s legal team in the court proceedings are bound to earn as much as $40 million in legal fees for their services to the firm according to a Bloomberg report.

BlockFi Bankruptcy and Accompanying Fat Checks

Based on services offered and agreed rates, the cryptocurrency exchange will pay the bulk of the fees to Kirkland & Ellis. According to its invoice, Kirkland & Ellis is asking for more than $16 million for its contribution to the completion of the Chapter 11 bankruptcy proceedings. Haynes Boone has also been an integral part of BlockFi since its November 2022 Chapter 11 filing.

This international corporate law firm is the closest to Kirkland & Ellis, in terms of their legal fees. Haynes Boone is requesting a little over $12.5 million for the work done since November 2022 when BlockFi went under after a contagion to FTX. Another law firm known as Brown Rudnick is asking for over $10.5 million while local counsel Cole Schotz wants almost $1 million in fees.

BlockFi was one of the crypto projects that got caught up in the bear market last year but its operations became more threatened in November after Bahamian-headquartered cryptocurrency exchange FTX collapsed and filed for bankruptcy. Since that time, the crypto lender has been trying to decide on a suitable restructuring plan that has investors at its core.

BlockFi is No Longer Bankrupt

In May, the court ruled in favor of BlockFi’s proposal to repay $300 million to some customers who were affected by the crash. This was after the bankruptcy judge clarified that assets in custodial wallets belong to customers and not BlockFi. 

Finally, the BlockFi bankruptcy was concluded in October, suggesting that its bankruptcy plans were effective. This feat could largely be attributed to the lawyers who put up their best arguments and for this reason, they are demanding humongous wages for their work.

Compared to crypto payment firm Ripple Labs Inc., the $40 million is nothing compared to the $200 million that it had to pay as a fee for defending itself against the United SEC. However, it is worth noting that Ripple’s case spanned almost three years while BlockFi’s bankruptcy proceedings started just last year.