Voyager’s Creditors Push Back Against Plans to Provide Execs With Legal Immunity
Bankrupt crypto lender Voyager’s plans to sell its assets to FTX US for $1.4 billion have so far gone relatively smoothly, but one major catch emerged on Wednesday – Voyager’s executives have included sweeping legal immunity for themselves in the proposed sale agreement.
In a partially-redacted objection to Voyager’s proposed sale agreement, Voyager’s Unsecured Creditors Committee (UCC) pushed back against the included provision for “broad releases” that would shield the crypto lender’s directors and officers – the individuals “principally responsible for the Debtors’ financial woes,” according to the filing – from future lawsuits.
In its current form, the sale agreement is contingent on the provision of legal immunity.
Attorneys for the UCC describe a “Hobson’s choice” for Voyager’s creditors: to either support the sale agreement as-is and have a chance at getting their money back faster while allowing Voyager’s executives to get off scot-free, or fight the plan and risk the bankruptcy process “devolving into a morass of litigation, to the sole detriment of unsecured creditors, whose assets will continue to remain frozen for a far longer period of time.”
According to Wednesday’s filings, the UCC conducted an investigation into Voyager’s executives’ conduct to find out what the legal immunity would shield them from, and called their findings “sobering.”
Due to the redactions in the document, details of the UCC’s findings are currently unavailable, but the attorneys argued that attempts to protect the executives from lawsuits were “particularly egregious” due to the potential for “colorable and valuable causes of action against these directors and officers.”
The UCC’s objection urges the court overseeing Voyager’s bankruptcy proceedings to reject the provision for legal immunity but proceed with the sale agreement.