Voyager Digital Receives Bankruptcy Court Approval to Pay Employees $1.6 Million Retention Bonus
Insolvent crypto lender Voyager Digital has received permission to pay bonuses amounting to $1.6 million to employees it deems critical to its operations.
34 Members of Staff to Receive Bonus Payments
On August 2, the company submitted a request to the U.S. Bankruptcy Court asking for permission to pay 38 members of staff $1.9 million in bonuses under its Key Employee Retention Plan (KERP). The amount was, however, reduced to $1.6 million after it became apparent that four of the targeted employees had already left Voyager.
According to court documents, none of the employees are top executives, with most working in areas such as I.T., accounting, and digital asset management.
Since filing for bankruptcy on July 5, 2022, the ailing crypto company has been working with a small group of employees to find a solution to its liquidity problem.
Voyager asserted that because of their invaluable institutional knowledge and understanding of the crypto business, the 34 individuals were exceedingly difficult to replace in the current marketplace.
At a hearing on Wednesday, U.S. Bankruptcy Judge Michael Wiles stated he would sanction the incentives. According to him, keeping essential workers from leaving would enable Voyager to maximize the value of its business and subsequently increase creditor recoveries.
Creditors Give Conditional Support After Initial Opposition
Voyager’s official committee of unsecured creditors initially filed an objection against the ailing crypto lender’s request to pay the bonuses. According to court filings, the creditors felt the justification for Voyager’s employee retention plan was insufficient. In the opinion of the creditors, Voyager employees were already well-paid and didn’t need a bonus to boot.
The creditors’ court filing also chastised Voyager for failing to cut costs sufficiently through layoffs. It went on to name-drop notable players in the crypto space who had cut staff during the crypto-winter.
The creditors also refuted Voyager’s assertion that it was in danger of losing the employees in question by pointing out that just 12 of the company’s roughly 350 employees had willingly resigned their positions since the commencement of bankruptcy proceedings.
However, the group withdrew its protest after the crypto lender agreed to take action, which included reducing the bonus pool and immediately cutting $4.6 million in yearly expenditures elsewhere.
The two parties resolved to set the KERP budget at 22.5% of the employees’ yearly salaries. The bonus will also be paid out in stages, with 55.6% being paid out at once and the remaining 44.4% being paid out after a year.
U.S. Trustee’s Office Overruled
In an August 19 filing, the U.S. Trustee’s Office, overseeing the administration of Voyager’s bankruptcy case, similarly objected to the company’s KERP request. The Trustee’s Office also raised concerns over Voyager Digital’s move to seal the names and titles of employees on the bonus list.
However, speaking to the issue, Michael Slade, an attorney representing Voyager, said:
“This program does not involve the senior management team, and data about these individuals would typically not exist in the public domain. We note that no creditor, shareholder, or economic stakeholder has objected to the motion to seal. We provided this information to the UCC, which was the only party to ask us for it, and the United States Trustee’s office. The information has not been withheld from anyone who asked for it.”
On his part, Judge Michael Wiles overruled the U.S. Trustee’s objections and agreed to seal the personal information of the Voyager employees as requested by the company. Judge Wiles also confirmed that none of the 34 employees had any managerial control, nor were they affiliated with the company’s board of directors.
