Voyager management has reportedly made ‘broad releases’ a precondition for the company’s sale to FTX.
The Official Committee of Unsecured Creditors (UCC) has opposed the immunity provisions or “broad releases” being planned for top executives as a precondition for the sale of Voyager Digital to FTX. As per the UCC filings with the United States Bankruptcy Court for the Southern District of New York (Manhattan) on Wednesday, the creditor group has argued that such provisions will prevent creditors from filing lawsuits to get more of their money back, a Bloomberg report said on Thursday.
Voyager Digital filed for bankruptcy in July after suffering heavy losses from its exposure to crypto hedge fund Three Arrows, which went bust in June amid a broad market crash. FTX won the bid to buy Voyager Digital’s assets last month for $1.4 billion in an auction, where it beat Binance in the race for the troubled crypto exchange and lending platform. The Voyager management reportedly added an immunity clause in the Voyager-FTX deal that provides protection from lawsuits to its top executives including directors, the coverage said.
Lawyers representing Voyager UCC told the bankruptcy court that the immunity provision in the deal leaves Voyager creditors with a Hobson’s choice. If they oppose the deal, they will have to wait for longer to access their funds and if they don’t oppose they would let those “principally responsible” for the company’s financial troubles go scot-free.
Meanwhile, Voyager’s court filings reveal that two members of the board of directors are investigating the circumstances leading to bankruptcy. If they find certain executives responsible for the company’s failure, these executives will be removed from the “broad releases” and could be sued.
