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While crypto creditors wallow, legal firms are raking in the fees.
A committee representing unsecured creditors of the bankrupt crypto broker Voyager has been charged $5.17 million in legal fees from March to May by its law firm McDermott Will & Emery, according to a legal filing submitted to the U.S. Bankruptcy Court of New York’s Southern District yesterday.
This brings the total cost of the Voyager credit committee’s legal fees for the fee period running from July 22, 2022, to May 18, 2023, to just under $16.5 million, of which around $9 million has already been paid.
The filing lists the “blended hourly rate” for all timekeepers (e.g. attorneys) as $1,026.76.
Voyager filed for Chapter 11 bankruptcy in July 2022 after revealing it had exposure to the collapsed crypto hedge fund Three Arrows Capital.
The broker then tried to court several buyers including FTX and Binance US.
The FTX deal fell through after the exchange itself filed for Chapter 11 last November—the largest bankruptcy the industry has seen so far. In April this year, Binance US backed out of a potential deal citing the hostile regulatory climate in the United States.
In May, the U.S. Bankruptcy Court for the Southern District of New York approved a liquidation plan for Voyager Digital to reimburse its customers $1.33 billion in digital assets.
The process has also run up high legal fees for Voyager.
Last week, it was reported that Voyager’s law firm Kirkland & Ellis charged the former broker $1.1 million in fees for work done in April this year.
Winter for blockchain companies, spring for their lawyers
The depegging of Terra’s so-called algorithmic stablecoin UST and the subsequent collapse of its ecosystem last May set off a domino effect of contagion that bankrupted multiple companies, including Celsius, Vauld, Voyager, BlockFi, Holdnaut, and FTX, resulting in an industry-wide credit crunch that was dubbed “Crypto Winter.”
But, as the adage goes, one man’s loss is another’s gain.
In this case, lawyers that flocked to the beleaguered firms have made an eye-popping amount of money from legal fees.
In December last year, lawyers representing bankrupt crypto lender Celsius—an early casualty of Crypto Winter, which filed for Chapter 11 in mid-July last year—collectively billed the firm $52.8 million in fees for the period running from the filing to the end of October that year.
The largest casualty, FTX, which also bankrupted around 130 affiliated agencies, has so far run up legal fees of over $200 million for the seven months of aid it has received since it filed for bankruptcy in November last year.