A Voyager crypto platform declared bankrupt a year ago, in July 2022, due to substantial losses caused by the bear market and the collapse of the Terra blockchain.
Subsequently, the company’s creditors requested the return of their assets. However, legal fees kept piling up, bringing them to a total amount of $16.4 million.
Voyager’s creditors were unsecured, and after the company fell due to the crypto market crash, the creditors’ committee sought legal help from McDermott Will & Emery, who were happy to represent them.
Recently, however, the legal team filed a bill for clients in the amount of $5.1 million.
Adding the sum to a host of other services, Voyager’s committee of unsecured creditors faces a total bill of $16.4 million.
Meanwhile, it should be noted that the initially projected amount that they had to pay was $11.2 million, established in the restructuring process.
So far, creditors have been able to raise and contribute $8.9 million to pay the cost of obtaining legal help.
However, with the amount skyrocketing to nearly double that amount, concerns have been raised regarding dwindling funds earmarked for distribution.
Why did legal costs grow?
In an attempt to explain the cost, McDermott Will & Emery’s bill revealed that the lawyers billed $1 million for 970.9 hours of work. His efforts went into creating a disclosure plan and agreement.
Billing stands out from his other notable roles, however, as the legal team had to meet with potential buyers, discuss issues with debtors, explore potential sales possibilities, and more.
They were even put in a position where they addressed concerns expressed by other stakeholders.
The legal firm claims that the deal to sell the company’s assets to FTX fell through following the exchange’s own crash in November 2022.
According to the company, the failure of the deal generated significant expenses during previous rate periods.
In the midst of all these challenges, Voyager paid $1.1 million to Kirkland & Ellis, the legal representation of the exchange.
2022 brought financial ruin for cryptocurrency firms, while law firms thrived
The Voyager collapse was just one of many examples of crypto business failure seen in 2022.
The industry was already facing a bearish wave, which was further fueled by the crash of the Terra blockchain, sparking a full-blown crypto winter.
The failure of many companies caused a domino effect, leading to the downfall of even more companies.
Regulatory scrutiny within the sector increased, but the situation escalated further with the collapse of FTX and numerous stock-linked companies late last year.
Additionally, in March 2022, prior to Voyager’s collapse, as many as seven US states issued cease and desist letters to the company, expressing concerns regarding its unregistered securities offering.
Given the situation, the SEC was taking companies and individuals to court, as well as creditors who wanted their money back.
Law firms thrived under the circumstances, as firms like FTX and Celsius paid massive amounts for legal assistance.
FTX alone paid more than $200 million in legal expenses, while Celsius paid another $50 million for its own legal help.
