• Voyager and Celsius’ court filings list the same lead attorney and contain several identical paragraphs
  • The insolvent crypto lenders may be using Chapter 11s as a “delay tactic”

The longer crypto’s bear market lingers, the more evident the tight-knit ties between the industry’s biggest players becomes. 

That co-dependence now seems to apply to their legal travails of late. 

Insolvent crypto lenders Celsius and Voyager Digital have both filed for Chapter 11 bankruptcy via Kirkland & Ellis, while Babel Finance has retained the behemoth corporate law firm to advise its restructuring.

The crypto lenders chose Kirkland for its past successes in Chapter 11, legal experts say, and Kirkland took on the three cases to give itself a reputation as a leader in crypto firm restructurings — which appear to just be getting started. 

Lawyers told Blockworks it makes sense the three bankrupt lenders would each hire Kirkland, given its sterling reputation. Kirkland led the two shortest Chapter 11 restructurings in history, both clocking in under 24 hours.

But in other cases, such as its ongoing representation of Toys R Us, Kirkland has engaged in years-long negotiations on behalf of its clients. Celsius and Voyager may be hoping their cases fall on the latter end of the spectrum, experts say.

“My guess is they’ve chosen Chapter 11 because they’re hoping the price of crypto goes back up, which takes them out of the situation they’re in. It’s like a delay tactic,” Kimberly Houser, a clinical assistant law professor at the University of North Texas, told Blockworks.

If the lenders pursue the same wait-it-out restructuring strategy, choosing Kirkland should make legal operations easier.

Firms commonly handle multiple cases in a given specialty because it is “more efficient as the attorneys often do not have to duplicate research,” Carol Goforth, law professor at the University of Arkansas, said in an email. 

Voyager and Celsius’ initial court filings both list Joshua Sussberg as their lead attorney. The portions that explain crypto terminology are identical. Large swaths of the two companies’ overviews of their Chapter 11 filings are directly copied.

The first day declarations, from Celsius and Voyager CEOs Alex Mashinsky and Stephen Erlich, respectively, both say factors largely beyond the companies’ control caused a “run on the bank.”

Celsius and Voyager each filed for Chapter 11 bankruptcy in the Southern District of New York — despite operations in multiple jurisdictions. 

Kirkland likely expects “some sort of favorable treatment” from the district court if it filed each bankruptcy there, Houser said, adding that future Chapter 11s may be filed elsewhere, such as Delaware, if the court rules unfavorably toward the crypto lenders.

The court will rule on practices without much precedent in bankruptcy proceedings, Will Brannan, partner at Lowenstein Sandler, told Blockworks in an email, citing “on and off-platform custodied cryptocurrency assets, rehypothecation activities, cryptocurrency lending implications, as well as the ramifications of customer participation in ‘earn’ and ‘yield’ product offerings” as novel issues for the court.

Successfully navigating the complexities of the three lenders’ financial woes would give Kirkland “a chance to be at the forefront of these emerging issues,” Brannan said. 

Kirkland taking on the three lenders’ cases to establish its reputation in crypto would seem a partial vindication of Celsius, which last week was sued by a former investment manager alleging financial mismanagement and fraud.

Kirkland would not want to represent Celsius if the law firm “believes there’s fraud involved,” according to Houser.

“Even though people are really upset about this, I don’t see any indication that this is fraud,” she said. 

Given the volatility of the crypto market, Houser is uncertain whether rising cryptoasset values will save Celsius and Voyager. But a prolonged crypto market slide could also benefit the companies in their Chapter 11 negotiations.

“If the creditors realize crypto values are not increasing, the creditors could see that the longer they wait the less value the crypto has and agree to pennies on the dollar” in repayment from the lenders, Houser said.

Kirkland & Ellis, Celsius, Voyager and Babel did not immediately respond to requests for comment.

Updated July 24, 2022, 3:05 pm — Correction: Babel Finance has not filed for bankruptcy and has retained Kirkland & Ellis to advise its restructuring.


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  • Blockworks
    Editorial Intern
    Jack Kubinec is an intern with the Blockworks editorial team. He is a rising senior at Cornell University where he has written for the Daily Sun and serves as Editor in Chief of Cornell Claritas. Contact Jack at [email protected]