Mintz Guides Cybersecurity Firm Through Confidential Arbitration and Public Bankruptcy Dispute

The Situation

Mintz was engaged by a leading cybersecurity incident response and digital forensics firm that provides critical services to organizations facing ransomware attacks, including threat‑actor negotiations and the facilitation of cryptocurrency procurement under urgent and high‑risk conditions.

The client had previously assisted a former customer involved in a post‑incident dispute with procuring cryptocurrency to satisfy ransom demands. Following the engagement, the customer filed for bankruptcy. Thereafter, approximately $10 million transferred in connection with the cryptocurrency procurement was identified by the bankruptcy estate as a potential preferential transfer, exposing the client to possible clawback liability.

A dispute arose regarding the scope and application of the indemnification provisions in the parties’ agreement. The client and the former customer participated in a three‑day, confidential arbitration before New Era ADR in November. Although the arbitration hearing concluded, the arbitrator stayed the decision while the parties pursued settlement discussions. In parallel, the bankruptcy litigation trust initiated a preference action in bankruptcy court—a proceeding that is not sealed and remains part of the public record.

The Approach

Mintz developed and executed a coordinated strategy to manage the client’s exposure across multiple forums while preserving confidentiality wherever possible.

The team conducted a comprehensive analysis of the contractual indemnification provisions, evaluating whether bankruptcy‑related clawback claims fell within the contract’s risk allocation framework. At the same time, Mintz assessed substantive defenses to the preference action under applicable bankruptcy law, including issues relating to control of funds, timing, and the nature of the transfers at issue.

Recognizing the interdependence of the contractual dispute and the bankruptcy claim, Mintz advocated for a unified resolution. The firm guided the client into a confidential, three‑party mediation involving the former customer and the litigation trust responsible for pursuing claims on behalf of the bankruptcy estate. This approach allowed all parties to address the indemnification dispute and the preference exposure in a single forum, while maintaining the non‑public nature of the arbitration and mediation proceedings.

The Outcome

The arbitration decision remains stayed as the parties continue to pursue a negotiated, global settlement through mediation. Mintz’s strategy significantly reduced the risk of prolonged, multi forum litigation and limited public exposure for the client, particularly with respect to the confidential arbitration and mediation proceedings.

While the bankruptcy preference action remains a matter of public record, the substance of the arbitration and mediation will not be disclosed publicly. The matter highlights Mintz’s ability to navigate complex disputes at the intersection of cybersecurity, contract law, and bankruptcy, and to protect clients operating in fast moving, high stakes incident response environments.