(Bloomberg) – Creditors of Voyager Digital Ltd. are challenging plans to provide directors and officers of the crypto lender immunity from lawsuits related to its descent into bankruptcy.
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The company’s pending sale to crypto exchange giant FTX appears to be conditioned on Voyager’s top executives receiving “broad releases” from lawsuits, shielding those “primarily responsible” for the company’s financial troubles. attorneys for Voyager’s official unsecured creditors committee said in court papers. filed Wednesday.
An investigation by creditors into the circumstances surrounding Voyager’s bankruptcy revealed “sobering” findings, but the releases would prevent lawsuits against the directors and officers in question, according to the group of creditors. Details of the investigation are redacted from documents filed in bankruptcy court.
That leaves creditors with a “Hobson’s choice” – either back the protections to quickly get the sale to FTX on the finish line, or risk costly delays as the Chapter 11 proceeding turns into a “quagmire of litigation.” , wrote the lawyers.
Two Voyager board members are also investigating bankruptcy preparations, 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 prosecuted, those individuals would be excluded from the proposed releases, according to court documents.
Voyager should be forced to better explain the need to protect executives, the creditors’ group argues. Legal action against them, if successful, could help Voyager users get more of their money back.
A representative for Voyager declined to comment.
Bankruptcy is Voyager Digital Holdings Inc., 22-10943, US Bankruptcy Court for the Southern District of New York (Manhattan).
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