Judge Rejects $430K Fee Request from White & Case in Terraform Bankruptcy
On Wednesday, April 9, 2025, Reuters reported that U.S. Bankruptcy Judge Brendan Shannon denied a request from the law firm White & Case to collect $430,000 for services rendered during the bankruptcy proceedings of Terraform Labs, a cryptocurrency company. The ruling was made during a court hearing in Wilmington, Delaware, where Judge Shannon stated that the firm was not formally retained to represent the junior creditors of Terraform.
The bankruptcy case stems from Terraform Labs’ Chapter 11 filing in January 2024, following the collapse of its stablecoin, TerraUSD, which had significant repercussions across cryptocurrency markets in 2022. Judge Shannon emphasized that under U.S. bankruptcy law, legal representation must be formally established, and attorneys must submit fee applications to receive payment from funds allocated by a bankrupt entity.
White & Case had initially billed for work done on behalf of Terraform’s creditor committee during the early stages of the bankruptcy. At that time, the committee had considered hiring both White & Case and another law firm, McDermott Will & Emery. However, the committee later opted to exclusively retain McDermott Will & Emery and never filed an application to officially engage White & Case’s services.
During the hearing, Judge Shannon expressed understanding for White & Case’s situation, acknowledging the firm’s contributions but reaffirming that the lack of formal retention precluded any payment. He noted, “I’m sympathetic to the position that they’re in, looking to get paid for services that were provided when a client simply made a decision to go with different counsel.”
In many Chapter 11 cases, including that of Terraform, bankrupt companies often fund the work of creditors’ committees to ensure fair representation of junior creditors’ interests. Terraform had previously reached settlements with the U.S. Securities and Exchange Commission (SEC) and its creditors following a jury’s determination that the company had defrauded investors.
Although White & Case admitted it was not formally retained, the firm argued that its fees should be honored due to its “substantial contribution” to the bankruptcy proceedings. The firm highlighted the contentious nature of the initial phase of Terraform’s bankruptcy, where the company contested the legitimacy of its creditors’ committee and promoted the idea that it had no significant creditors.
White & Case attorney Gregory Pesce addressed the court, arguing that denying the firm’s fees would unfairly benefit Terraform, which, according to Pesce, had gained from the legal strategies implemented by White & Case. He described the work done as crucial in reaching a settlement that ultimately brought about a resolution to the Chapter 11 case.
The U.S. Trustee’s office, responsible for overseeing bankruptcy cases, opposed White & Case’s request for fees. Attorney Jane Leamy, representing the U.S. Trustee, characterized the law firm’s pursuit of payment as an “improper runaround” of the established rules regarding attorney retention in bankruptcy situations. Judge Shannon concurred with the Trustee’s assessment that the fees could not be approved but acknowledged White & Case’s efforts in seeking compensation.
White & Case’s billing included charges for 13 professionals who collectively worked 316.20 hours between February 29 and March 12. Notably, one partner’s hourly rate was set at $2,300.
Source: Reuters
