Voyager Digital Ltd. creditors are taking issue with plans to provide the crypto lender’s directors and officers with immunity from lawsuits tied to its descent into bankruptcy.
(Bloomberg) — Voyager Digital Ltd. creditors are taking issue with plans to provide the crypto lender’s directors and officers with immunity from lawsuits tied to its descent into bankruptcy.
The company’s pending sale to crypto exchange giant FTX appears to be conditioned on Voyager’s top executives being afforded “broad releases” from lawsuits, protecting those “principally responsible” for the firm’s financial problems, lawyers for Voyager’s official committee of unsecured creditors said in court papers filed Wednesday.
An investigation by the creditors into the circumstances around Voyager’s bankruptcy revealed “sobering” findings, but the releases would prevent claims against the directors and officers in question from being pursued, according to the creditor group. Details of the investigation are redacted from the bankruptcy court filings.
This leaves the creditors with a “Hobson’s choice” — either support the protections to quickly get the sale to FTX over the finish line, or risk costly delays as the Chapter 11 proceedings turn into a “morass of litigation,” wrote the lawyers.
Two members of Voyager’s board of directors are also investigating the run-up to the bankruptcy, including the loan to now-defunct hedge fund Three Arrows Capital that weighed heavily on the company. If those board members conclude that certain Voyager executives could or should be sued, those people would be excluded from the proposed releases, court papers show.
Voyager should be forced to better explain the need for protecting the executives, the creditor group argues. Lawsuits against them, if successful, could help get Voyager users more of their money back.
A representative for Voyager declined to comment.
The bankruptcy is Voyager Digital Holdings Inc., 22-10943, U.S. Bankruptcy Court for the Southern District of New York (Manhattan).
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