More than 30 employees at the bankrupt cryptocurrency exchange Voyager will receive $1.6 million in bonus pay as the company scrambles to return customers’ funds frozen on its platform.
Bankruptcy Court judges in southern New York approved Voyager’s request to award key staff this week. Voyager argued it needed to award top workers as a way to keep them as the company restructures its financial assets. Under the Key Employee Retention Plan (KERP), 34 out of 328 employees will be paid an extra 22.5 per cent of their annual salaries which amounts to $1.6 million.
These employees provide services that are considered essential for the company, such as accounting, IT infrastructure, legal, and the like. “[Voyager] employees have legitimate reasons to be concerned about their long- term employment status given the ongoing sale process and uncertainty of future operations,” the company’s lawyers said in court filings [PDF].
“And key employees are necessary regardless of whether there is a sale or a stand-alone reorganization. To confirm a stand-alone plan, [Voyager] will obviously need these employees to operate [its] go-forward business…Ultimately, retaining key employees is critical to successfully consummate any transaction that delivers value to customers.”
Voyager had asked judges to approve a total of $1.9m in bonus pay for 38 employees, and this kind of request is standard stuff for businesses that have gone broke and need some kind of workforce to clean up the mess. That said, the Official Committee of Unsecured Creditors appointed to represent those who are owed money objected. The committee criticized Voyager for trying to award staff when consumers were yet to be compensated for their losses, and said it had provided zero evidence that employees would resign without the extra pay.
“At a time when thousands of creditors struggle to pay basic personal expenses due to the Debtors’ flawed business model, [Voyager] now seek to pay bonuses to their already well-compensated employees…It is difficult to understand how the KERP ‘is necessary and appropriate to avoid costly disruptions to the [Voyager’s] business and allow the Debtors to resume operations post-emergency,’ as the Debtors allege,” it said in court documents [PDF].
The committee went as far as arguing that employees are unlikely to resign given that the job market in the cryptocurrency industry “is relatively barren” given the latest layoffs from companies like Coinbase. Voyager and the creditors, however, reached an agreement about the bonuses when the cryptocurrency exchange promised to whittle down the total bonus payments to $1.6 million and slash other costs to save $4.6 million elsewhere.
Voyager has returned about $219 million or 80 per cent of funds to customers who stored their funds as cash within the biz, a lawyer at the company said, according to Bloomberg. But those who stored cryptocurrencies in their accounts have yet to be compensated.
The company said consumers could start filing claims for their crypto-coins now. Earlier this month, judges cleared the company to start returning $270 million to customers. ®