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Sullivan & Cromwell's AI hallucinations: what the firm told the bankruptcy court, and what happened next

Sullivan & Cromwell disclosed AI-hallucinated citations in a Chapter 15 emergency motion in April 2026. The letter, the 28-citation count, and the docket since.

Edited and verified by Cognesio LLP

Researched with AI assistance · sources verified by Cognesio LLP · How this was made ↓

In the US Bankruptcy Court for the Southern District of New York, Sullivan & Cromwell wrote to Chief Judge Martin Glenn on 18 April 2026 to say that an emergency motion it had filed nine days earlier contained citations invented by artificial intelligence. The case is In re Prince Global Holdings Ltd., No. 26-10769 (MG), a Chapter 15 proceeding in which the firm acts for the joint provisional liquidators. The letter, the corrected motion and the opposing letter are on the public docket, so the record can be read rather than reconstructed from press reports.

What did Sullivan & Cromwell tell the court?

The firm told the court that its 9 April 2026 emergency motion for ex parte and provisional relief “includes inaccurate citations and other errors”, that the errors included AI hallucinations, that its own AI policies “were not followed” in preparing the motion, and that its citation review had missed the problem. It withdrew the motion and filed a corrected version the same day.

The five-page filing is signed by partner Andrew G. Dietderich. It defines the term for the court: hallucinations “are instances in which artificial intelligence tools fabricate case citations, misquote authorities, or generate non-existent legal sources.” It then says something few firms have put on a docket in their own words:

“The Firm’s policies on the use of AI were not followed in connection with the preparation of the Motion.”

The letter describes those policies at some length. Access to generative AI tools is conditioned on two mandatory training modules. The training tells lawyers to “trust nothing and verify everything”. The firm’s Office Manual for Lawyers requires that lawyers “must independently check all answers, case citations, and other information or work product received from an AI Program for both substantive and non-substantive accuracy.” None of that prevented the filing. Dietderich writes that he takes responsibility under Local Bankruptcy Rule 9011-1(d), and that the firm re-reviewed every filing in the matter and found no other AI-related errors, though it did find clerical mistakes and one citation that confused section 1517(d) with Rule 6004(h).

Schedule A to the letter lists the corrections paragraph by paragraph. They run from paragraph 19 to paragraph 60 of the motion, and continue through the verified petition, the joint-administration motion, the scheduling motion and the Chissick and Pretlove declarations. Some are volume and page numbers: In re Soundview Elite Ltd. was cited at 503 B.R. 571 and corrected to 543 B.R. 78. Some are Westlaw numbers: In re Three Arrows Capital moves from 2022 WL 17985951 to 2022 WL 17985969, with the parenthetical rewritten. Several are parentheticals rewritten because the quoted language was not in the opinion. The corrected motion (ECF 27) was filed with a redline against the original so the changes can be checked line by line.

Who found the errors, and how many were there?

Opposing counsel found them. The letter thanks Boies Schiller Flexner for “bringing this matter to our attention”. A second objecting party, represented by Kobre & Kim, then wrote to the court on 21 April 2026 asking to adjourn the hearing.

Kobre & Kim’s letter says the S&C letter “identified no less than 28 erroneous citations in the Motion—including, but not limited to, fabricated quotations from an opinion from this Court”. It notes that the corrected motion was filed after both objectors had already lodged their objections, and that Sullivan & Cromwell’s investigation appears to have taken “approximately 36 hours”. The letter asks for time to confirm “that there are no other hallucinations or false citations” in the liquidators’ papers. In a footnote it accepts that the corrections were not substantive changes to the argument.

The letter does not say which AI tool was used, and neither does Sullivan & Cromwell’s. The tracker record therefore leaves the tool field blank.

What did the judge do about it?

Nothing that appears on the docket. Chief Judge Glenn granted provisional relief in a 36-page memorandum opinion on 23 April 2026, marked for publication, which does not mention the citation errors. The provisional relief order followed on 30 April. Recognition of the BVI proceedings as foreign main proceedings was granted on 11 June 2026 (opinion) and 18 June 2026 (order), and an appeal is now pending in the District Court under No. 26-cv-05279 before Judge Caproni.

The public docket runs to 111 entries, the most recent dated 10 August 2026 (checked 4 September 2026). Nothing on it is a show-cause order, a Rule 9011 motion or a sanctions ruling directed at the April motion; a text-only order entered later, or a document nobody has bought from PACER, would not show in the RECAP archive. The court’s silence is a finding of a kind: the disclosure came from the firm, within days, with a corrected filing and a redline attached, and the court moved on to the merits.

That outcome is consistent with the line the courts have drawn between disclosure and concealment. In United States v. Cohen, 724 F. Supp. 3d 251 (S.D.N.Y. 2024), Judge Furman declined to find bad faith on the part of the lawyer who had filed citations invented by Google Bard: he learned of the problem only from the court’s order to show cause and had never been given the chance to withdraw them. In the Central District of California a year later, a Special Master ordered two firms to pay $31,100 in Lacey v. State Farm for the opposite pattern: an AI-drafted brief re-filed without disclosure after the tribunal had queried it. Of the 93 tracker rows dated 2026 as of 4 September 2026, 21 ended in sanctions, 21 in a warning, 15 in some other disposition, 9 in dismissal, 8 in a referral, 7 in a fine, 7 in a costs order, 3 in suspension and 2 are pending; Sullivan & Cromwell’s is one of the 15.

Why it matters

The letter is a rare primary document about how a large firm’s AI controls fail. The controls existed: gated access, mandatory training, a written verification rule. The failure was that a lawyer did not follow them and the citation check did not catch the result. The difference here is the response, which the firm chose to put in writing and on the docket.

The open question is whether the court will say anything at all. Chief Judge Glenn issued three substantive opinions in the case without touching the subject. A case reassignment notice was docketed on 7 August 2026; the document is not in the public archive, so which judge now has the case is not confirmed. If the appeal record goes up to the District Court without a ruling on the April motion, this incident will end with no judicial finding on the conduct.

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