Rising Legal Costs Amidst Voyager’s Restructuring Process Raise Concerns for Creditors
In a development that highlights the escalating legal expenses surrounding Voyager’s restructuring, law firm McDermott Will & Emery has billed a staggering $5.1 million to the unsecured creditors’ committee for their services rendered from March to May. This latest bill adds to the mounting compensation charged to the group, surpassing the budgeted amount and raising concerns among stakeholders.
The cumulative compensation charged to the group has now reached $16.4 million, significantly exceeding the initial budget of $11.2 million set as part of the restructuring process. So far, the creditors have paid out $8.9 million towards the billed compensation, further burdening their financial obligations.
One of the prominent aspects of the bill includes an astounding $1 million charged for 970.9 hours of work on plan and disclosure settlement. This substantial effort involved extensive discussions on sale options with the Debtors, meetings with potential buyers, and the careful examination of objections presented by various stakeholders.
Previous billing periods also witnessed significant work in this category, primarily driven by the potential sale of Voyager’s assets to FTX. Unfortunately, the deal fell through due to the exchange’s bankruptcy, leaving a void of anticipated benefits.
Adding to the financial strain, Voyager incurred an additional $1.1 million bill paid to law firm Kirkland & Ellis for their representation of the exchange as the debtor. This ongoing influx of legal expenses raises concerns among creditors, who fear that the substantial costs and prolonged legal proceedings will ultimately diminish the funds available for distribution.
The recent wave of bankruptcies triggered by the 2022 market downturn has proven lucrative for law firms, with notable entities such as FTX and Celsius spending over $200 million and $50 million, respectively, on legal fees. While these expenses may be justified by the complexity and scale of such cases, critics argue that the exorbitant costs and protracted legal processes impede the equitable distribution of funds to creditors.
As Voyager’s restructuring process unfolds, stakeholders closely monitor the impact of escalating legal expenses on the overall recovery and express the need for a balanced approach that ensures creditors receive a fair share of the available assets.
Disclaimer: This article is for informational purposes only and does not constitute legal advice or any form of endorsement or recommendation.
