By Voyager Creditors Charged $5.1 Million for Legal Services Between March-May
A crypto platform Voyager filed for bankruptcy a year ago, in July 2022, due to substantial losses caused by the bear market and the collapse of the Terra blockchain.
In the aftermath, the company’s creditors requested the return of their assets. However, the legal fees kept stacking, leading them to a total amount of $16.4 million.
Voyager creditors were unsecured, and after the company fell due to the crypto market crash, the committee of creditors sought legal help from McDermott Will & Emery, who were happy to represent them.
Recently, however, the legal team submitted an invoice for the clients, amounting to $5.1 million.
Adding the sum to a number of other services, the committee of unsecured Voyager creditors is facing a total bill of $16.4 million.
Meanwhile, it is worth noting that the initially projected amount they were required to pay was $11.2 million, established in the restructuring process.
So far, creditors managed to collect and contribute $8.9 million to pay the cost of getting legal help.
However, with the amount skyrocketing to nearly double that amount, concerns have emerged regarding the diminishing funds meant for distribution.
Why did the legal costs grow?
In an attempt to explain the cost, McDermott Will & Emery’s invoice revealed that the lawyers billed $1 million for 970.9 hours of work. Their efforts were dedicated to creating a plan and disclosure settlement.
However, the billing stands out from their other notable charges, as the legal team had to meet potential buyers, discuss the matters with the debtors, explore potential sale possibilities, and more.
They were even put in a position where they addressed concerns other stakeholders expressed.
The legal firm claims that the agreement to sell the company’s assets to FTX fell through following the exchange’s own downfall in November 2022.
The failure of the deal led to significant expenses during earlier fee periods, according to the company.
Amid all these challenges, Voyager paid the $1.1 million to Kirkland & Ellis, the exchange’s legal representation.
2022 brought financial ruin for crypto firms, while law companies thrived
Voyager’s collapse was just one of the many examples of crypto firms’ failure observed in 2022.
The industry was already facing a bearish wave, which was further fueled by the fall of the Terra blockchain, causing a full-blown crypto winter.
The failure of many companies caused a ripple effect, leading to even more firms’ downfall.
The regulatory scrutiny within the sector increased, but the situation escalated even further with the collapse of FTX and numerous businesses tied to the exchange in the later stages of last year.
Furthermore, in March 2022, prior to Voyager’s collapse, as many as seven US states issued cease-and-desist letters to the company, voicing their concerns regarding its offering of unregistered securities.
Given the situation, the SEC was taking companies and individuals to court, and so did creditors who wanted their money back.
Law firms thrived under the circumstances, as firms like FTX and Celsius paid massive amounts for legal aid.
FTX alone paid over $200 million in legal expenses, while Celsius paid another $50 million for its own legal help.
Related Articles:
- Voyager Digital Announces Liquidation and Shutdown Following Failed FTX and Binance.US Deals
- Voyager Digital to Start Repaying Frozen Crypto Funds After Court Approval
- Voyager Digital Customers Will Recover 35% of Their Crypto Deposits
