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On Monday, in a court filing crypto lending firm Voyager Digital has revealed its plan to settle with its two executives appointed to settle the issue of handing of loans to Three Arrows Capital. Worth mentioning that the latter was one of the major crypto hedge funds which ended up filing for bankruptcy.
According to the filing Voyager’s CEO Stephern Ehrlich and Chief Financial Officer Evan Psaropolous played a prominent role to allow a one billion USD worth loan to 3AC in March. The loan was not entirely assured whereas it had only been given after the little disclosure from the hedge fund.
However, when Terra ecosystem’s native tokens LUNA and USD stablecoin went on to collapse in May this year, crypto lender firm asked Three Arrows about the impact on the hedge fund.
Tim Lo, a 3AC employee, told Voyager to recall all of its loans to 3AC later in June, though, since he was concerned that the company’s owners weren’t responding to questions from Lo and other employees.
After receiving that message, Voyager immediately recalled all of its existing loans to 3AC, and the hedge fund shortly went into liquidation in the British Virgin Islands.
A special committee made up of two Voyager board members concluded that it would be difficult and expensive to pursue negligence charges against Ehrlich and Psaropoulos, who is currently the company’s chief commercial officer, and that Voyager would be unlikely to receive much compensation.
Instead, Voyager is recommending a settlement in which Ehrlich would pay $1.1 million in cash to Voyager, seek $20 million in claims under his directors and officers insurance coverage, and keep Psaropoulos and Ehrlich in their existing positions.
The bankruptcy judge in the case must first approve the settlement.
Voyager, a company with headquarters in Toronto, filed for bankruptcy in New York in July, largely as a result of the losses on its loans to Three Arrows.
According to court filings, customers of the insolvent cryptocurrency lender Voyager Digital may be eligible to receive 72% of the value of their accounts as part of a tentative agreement with FTX US.
The tentative sale will not be final, according to United States bankruptcy judge Michael Wiles, until it has been approved by Voyager’s creditors and he has given his approval to the bankruptcy payout plan. Wiles stated this during the court hearing: “If the plan falls apart, there’s no part of this agreement that survives.”
A “fiduciary out” provision is also there, allowing Voyager to terminate its agreement with FTX should any proposals be made that would be beneficial for creditors.
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