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The creditors of cryptocurrency lender Voyager Digital don't think the business should provide its staff "retention awards," according to a new court document released late Friday.
Voyager requested that a federal judge approved $1.9 million of its funds for a "Key Employee Retention Plan" (KERP), which would provide bonuses to 38 employees that the company claimed were essential to its continued operation and restructuring. Voyager is presently involved in bankruptcy proceedings in the U.S. Bankruptcy Court for the Southern District of New York.
The Official Committee of Unsecured Creditors, a collection of Voyager clients, objected on Friday, claiming that Voyager personnel are "already well-compensated" and that the business hasn't done anything more to cut costs.
“The Debtors have only made conclusory claims that this personnel is necessary to support the retention judgments. Importantly, the Debtors don’t offer proof that any 38 Participants would quit. And the reason is that there is no such evidence since just 12 of the approximately 350 employees of the Debtors have resigned voluntarily since the Petition Date, “the document stated.
According to Voyager’s August 2 petition, the workers carry out “important accounting, cash and digital asset management, IT infrastructure, legal, and other critical activities for the Debtors.”
“The KERP is in line with retention plans in comparable chapter 11 cases and permits the Debtors to keep hold of a few key non-insider workers. The KERP outlines the distribution of cash retention rewards to 38 non-insider employees of the Debtors, “the document stated.
The value of the “huge equity component” that normally makes up an employee’s overall compensation “has cratered,” meaning that employees are now being paid less than they are worth. Additionally, the business stated at the time that Voyager’s current reorganization plan would cancel stock shares. The company’s efforts to restructure would be harmed if these individuals left, among other things.
The term “non-insider” apparently refers to non-executive staff when describing these workers.
The creditors argue that even if these individuals moved for better opportunities, they should be simple to replace, given the industry’s recent layoffs.
The names, titles, incomes, names of the 38 employees’ supervisors, and proposed incentives were redacted, according to Voyager CEO Steven Ehrlich, who requested permission from the court because this material is “non-public, personal, and sensitive information.”
The U.S. Trustee’s Office opposed Ehrlich’s motion on Friday after filing earlier this week to appoint an impartial examiner to look at the financials of Celsius Network (another crypto lender facing bankruptcy proceedings).
According to the Trustee’s filing, “The Debtors seek an order under Bankruptcy Code section 107(b) authorizing the sealing or redaction of virtually all relevant information regarding the names, job titles, supervisor information, salaries, and proposed bonus amounts of each of the 38 ERP Participants.”
Creditors and other interested parties will require this crucial information to assess the Bonus Motion.
Voyager has asserted that the employees are not insiders. Still, the Trustee’s office indicated that other parties interested in the proceedings may contend otherwise and should be allowed to do so.
The Trustee’s filing even states in a footnote that “one or more of the KERP Participants may well be characterized as an insider” based on their examination of the unredacted information.
On August 24, 2022, the bankruptcy court will convene a hearing to discuss the motion.
