Sullivan & Cromwell has acknowledged significant errors in a legal filing related to a U.S. bankruptcy court case due to AI hallucinations in legal filings. The admission was made concerning a motion filed on April 9 in the U.S. Bankruptcy Court for the Southern District of New York. The firm noted that the errors included fabricated citations and incorrect characterizations of legal authorities. These issues were corrected following the withdrawal of the original motion and submission of a revised version.
Court-appointed liquidators from the British Virgin Islands have sought recognition under Chapter 15 to act on behalf of creditors and alleged victims linked to Prince Group and Chen Zhi. The filing identifies those liquidators as the foreign representatives in proceedings connected to Prince Group and Chen Zhi. The matter is presented within bankruptcy proceedings.
Prosecutors allege Chen Zhi directed scam operations that targeted victims worldwide and that billions of dollars in cryptocurrency are linked to the activity. Chen was detained in Cambodia and repatriated to China. U.S. authorities have linked Prince Group to large-scale fraud operations in Southeast Asia. Prince Group has been sanctioned by the UK and U.S. governments.
The filings reflect cross-border elements, including foreign liquidators and allegations involving activity in multiple countries. The allegations and sanctions are part of the record in the ongoing bankruptcy-related proceedings now.
Sullivan & Cromwell admitted to significant errors in a recent legal filing due to artificial intelligence “hallucinations.” These errors included at least 28 erroneous citations and mischaracterizations of authorities in a court document. Some quotations attributed to the court were found to be non-existent, while certain citations referred to incorrect legal circuits. This was formally acknowledged in a letter to Judge Martin Glenn in the U.S. Bankruptcy Court for the Southern District of New York.
The firm has implemented strict internal policies concerning the use of AI tools. Before access to generative AI tools is granted, Sullivan & Cromwell requires lawyers to complete two training modules, which emphasize the risks associated with AI hallucinations. These include the fabrication of case citations, misinterpretation of authorities, and inaccurate quotations. Andrew Dietderich, head of the firm’s restructuring practice, stated, “We deeply regret that this has occurred,” highlighting the critical nature of these issues and the firm’s commitment to addressing them.
The original motion was withdrawn and a revised version was filed after objections from opposing counsel at Boies Schiller Flexner. Those counsel identified at least 28 erroneous citations in the withdrawn filing and said some language attributed to the U.S. Bankruptcy Code could not be found. They also noted that the corrected submission misstated case law in multiple places and that several authorities were mischaracterized or misidentified, with some citations referring to a different circuit. The timing of the corrected submission prompted a dispute, as opposing counsel argued the revision was prejudicial because it came after they had lodged objections and after a hearing status conference had been requested.
Sullivan & Cromwell acknowledged that a recent bankruptcy filing contained AI-generated hallucinations that produced fabricated authorities and mischaracterized legal authorities, and the firm withdrew the original motion and filed a revised submission. The firm said lawyers must complete two required training modules before using generative AI, and the training emphasizes risks including citation fabrication, misinterpretation of authorities, and inaccurate quotations.
