Blockchain Technologies, Cryptocurrency Bankruptcies, and Claw-Back Litigation

Overview

Blockchain technologies present new and complex challenges for debtors, creditors, and their advisors. The technology and laws in this field are still developing and, to a degree, untested. From defending claw-back litigation to regulatory analysis and compliance, the bankruptcy attorneys at Morris James combine decades of bankruptcy experience – litigation and transactional – with cutting-edge knowledge of the latest blockchain technologies and ever-changing regulations.

Since Bitcoin’s inception in 2008, blockchain spurred an industry of complex digital currencies, global crypto exchanges, and related blockchain technologies. Laws and regulations have failed to keep up, leaving certain behaviors unchecked and increased risk exposure in the industry. More recently, 2022 brought with it a seismic shift in the value of cryptocurrencies, the inability of funds and related investment vehicles to withstand volatility, and a stark increase in blockchain-related bankruptcies. Specifically, in late 2022, FTX filed for bankruptcy protection and several other crypto entities followed suit. At the end of 2022, the global cryptocurrency market cap fell to approximately $798 billion.

At Morris James, we are involved in multiple cryptocurrency bankruptcy proceedings, including representing defendants involved in claw-back litigation. We have gained experience in representing these similarly situated clients and have leveraged that experience in each new matter we are involved in. For example, we know the players and lingo and can speak the same proverbial language as prospective and current clients.

Our cryptocurrency experience is not limited, however. We consistently leverage the knowledge and skills of attorneys across our firm in the same cryptocurrency bankruptcy proceedings. Further, we know how important it is to work with debtors, creditors, committees, vendors, lenders, and other stakeholders to achieve global consensus on issues, and can provide cogent representation at every stage of the bankruptcy process. Whether already involved in bankruptcy litigation or proactively assessing your insolvency risk exposure, the bankruptcy attorneys at Morris James are adept at navigating complex digital transactions and disputes.

If you have been sued in a cryptocurrency bankruptcy proceeding, email us or call us at 302.888.6836 to speak to one of our experienced bankruptcy attorneys.

What Our Clients Say

“The lawyers give exceptional representation and results.”
Chambers USA - America’s Leading Lawyers for Business.

“Their timeliness, attention to detail, and willingness to go the extra mile in terms of client service make a huge difference to us in our approach to Delaware cases.”
Chambers USA - America’s Leading Lawyers for Business.

“I do not recall one time where I felt I received less than excellent client service.”
Chambers USA - America’s Leading Lawyers for Business.

“Their concise and prompt responses on cases have aided in keeping our costs at a minimum, while experiencing exceptional counsel support.”
Chambers USA - America’s Leading Lawyers for Business.

Experience

Creditors. We represent creditors including indenture trustees, owner trustees, liquidating trustees, lenders (pre- and post-petition), insurance premium finance companies, mortgagees, equipment lessors, landlords, mechanics lien holders, and materialmen, insurance carriers, professionals, trade vendors, owners/licensors, and licensees of intellectual property, franchisors and franchisees, municipalities and other public entities, and other secured, unsecured, priority, and administrative creditors in a broad spectrum of issues that arise in bankruptcy proceedings.

Committees and Trustees. We represent official committees of unsecured creditors, official committees of equity holders, and chapter 11 and chapter 7 trustees. Such representations often entail an important investigative function, as the committee or trustee may undertake to investigate and pursue legal claims that the debtor and its professionals cannot or decline to pursue. We also represent ad hoc committees of creditors and equity holders.

Debtors and Liquidating Agents and Trusts. We have extensive experience counseling debtors through the bankruptcy process. These representations include pre-bankruptcy workouts and debt restructurings as well as through bankruptcy proceedings. In addition, we represent the interests of bankruptcy estates through the representation of post-confirmation liquidation agents and trusts.

Purchasers. If a client is interested in purchasing assets from a debtor through a 363 sale or through a chapter 11 plan, we are able to guide the client through the purchasing process, from developing bid procedures, drafting asset purchase agreements, and participating in auctions and sale hearings.

Fiduciary or Shareholder Representations. Often, former or present directors and officers of insolvent companies require advice to successfully navigate a bankruptcy case or assist them in appropriately exercising their fiduciary obligations. Shareholders or equity holders can also require assistance when their investments are at risk. We counsel directors (including special committees), managers, officers, and shareholders of insolvent companies.

Bankruptcy Litigation. We handle all types of litigation in bankruptcy cases and adversary proceedings. Some of the litigation matters we handle involve avoidance actions, asset sales, lien enforcement or challenges, discovery, depositions, plan confirmations, and appeals. Over the years, we have represented thousands of defendants and have been instrumental in developing aggressive defenses to avoidance actions in order to accomplish our clients’ goals.