Voyager’s bankruptcy problems continue to grow and gain media coverage. They are being criticized for their plan to give out $2 million in bonuses to retain their employees during the bankruptcy proceedings.
Creditor’s Dispute
According to a new filing in a New York bankruptcy court, lawyers speaking on behalf of a group of unsecured creditors are disputing Voyager Digital’s proposed Key Employee Retention Plan (KERP).
“At a time when thousands of creditors struggle to pay basic personal expenses due to the Debtors’ flawed business model, the Debtors now seek to pay bonuses to their already well-compensated employees.
And despite customer heartaches, many of which are set forth in dozens of letters filed on the docket, the Debtors have taken no measures to reduce headcount. This stands in stark contrast to how some of the most prominent cryptocurrency companies have reacted since the start of the ‘crypto winter…’”
Voyager Plan
The court document says Voyager’s plan includes the following provisions while seeking permission to outlay a maximum of $1.9 million for employee compensation,
“The Participants consist of 38 employees who perform various duties, including accounting, cash and digital asset management, IT infrastructure, legal, and human resources.
Pursuant to the KERP, the Debtors seek authority to award the Participants with two equal cash payments equal to 25% of each Participant’s annual salary…”
The new filing questions whether the plan passes the “sound business judgment” test, including whether the cost of the bonuses would be reasonable under Voyager’s current situation and what method of due diligence was conducted prior to the proposal.
The document concludes,
“The facts and circumstances do not support making payments to the Participants outside the ordinary course of business, and thus, the Motion should be denied.”
Back in early July, Voyager halted all trading, deposits and withdrawals for customers after a prominent borrower, crypto hedge fund Three Arrows Capital (3AC), failed to pay back a loan worth hundreds of millions of dollars.
Several weeks later, the U.S. Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) accused the firm of falsely representing its deposit insurance status in violation of the Deposit Insurance Act.
Voyager received court approval earlier this month to allow customers to resume cash withdrawals.
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