Voyager Creditor Committee to Settle $5.2M in Legal Fees
On Monday, a legal filing was submitted to the New York Southern District Bankruptcy court outlining the legal charges Voyager Creditors Committee is required to pay by McDermott Will & Emery law firm. Per the report, the bankrupt crypto brokerage firm would be required to pay $5.17 million for legal fees.
The new billing has incorporated the legal services McDermott Will & Emery has provided to the insolvent crypto firm from March 1 to May 13, 2023.
Voyager Creditors Committee Incurs $5.2M in Legal Fees
Initially, the committee had projected that the legal fees incurred in the reorganization plan would amount to $11.2 million. However, the new billing report would compel the crypto broker to pay $5.2 million more than the estimated amount. Currently, the Voyager creditors committee has only paid around $8.9 million to the law firm.
A review of the Monday filing revealed that the law firm charged the highest for the services provided during the negotiations with the debtors on the suitable sale plan of Voyagers assets. The report stated that the attorney worked for approximately 970.9 hours in disclosure settlement which they charged $1 million. Subsequently, McDermott computed the hourly rates for all the timekeepers involved in the Voyager case, which totaled $1026.76.
Role of Legal Firms in Bankruptcy Proceedings
Besides the hourly rates, the McDermott legal team outlined the legal services it provided the Voyager committee. The billing report stated that Voyager was required to pay fees for legal advice provided by McDermott.
Also, the legal firm charged for the meeting it attended on behalf of the client. The billing has incorporated the fees incurred in drafting legal documents such as reports and applications, orders, responses, and other completed paperwork.
Before this, the insolvent lending platform had paid $1.1 million to Kirkland & Ellis for the legal services provided by the law firm when Voyager attempted to sell off its assets to FTX. Even though the court failed to approve the Voyager payout, the Toronto-based crypto broker acknowledged Kirkland & Ellis’ support.
Reportedly last July, Voyager filed for Chapter 11 of bankruptcy protection following the exposure to the bankrupt hedge fund Three Arrows Capital (3AC), amounting to $661 million. Under Chapter 11 of bankruptcy protection, the embattled firms are guided on financial restructuring plans to safeguard the stakeholder’s interests.
Factors Contributing to Increase in Legal Cost
For months Voyager has been seeking potential buyers, including Binance US and FTX, to maximize customers’ value. During the last April sale plan negotiation, the Binance US team abandons plans to acquire Voyager’s assets due to hostile regulations in the US.
In May, the court revealed that the troubled crypto brokers owe 100000 creditors around $1.3 billion and total liabilities valued between $1 billion to $10 billion. The bankruptcy court also approved Voyager’s Digital liquidation plan that will force the crypto firm to pay customers assets worth over $1.33 billion.
On the bankruptcy list Voyager, Celsius, BlockFi, and FTX, among other insolvent crypto firms, are reportedly linked to crypto winter. Irrespective of this, the lengthy bankruptcy proceedings have exposed crypto firms to high legal fees. In a recent report, the Bahamas crypto exchange FTX was supposed to pay a legal and financial fee amounting to over $200 million for services provided from November .
In December, law firm representing Celsius in the ongoing bankruptcy proceedings charged the lending platform a legal fee amounting to $52.8 million.
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