Voyager committee objects to government’s confirmation-stay request

By Sarah Lizee

Olympia, Wash., March 15 – Voyager Digital Ltd.’s official committee of unsecured creditors objected to a motion from the United States and Region 2 U.S. trustee William K. Harrington that seeks to stay confirmation of the company’s Chapter 11 plan pending an appeal, according to documents filed Wednesday with the U.S. Bankruptcy Court for the Southern District of New York.

As previously reported, the plan was confirmed on March 8. The U.S. trustee filed an appeal the next day.

Through the confirmation order, the court overruled an objection from the Securities and Exchange Commission, which stated some activities proposed in the plan may create unspecified securities law violations.

The United States and the U.S. trustee are now seeking either a stay of the exculpation provision in the confirmation order and plan while the appeal is pending, or a two-week stay of the confirmation order while the government seeks similar relief from the district court.

“This stay of the confirmation order pending its subsequent appeal(s) of the same is sought by the government seemingly without regard for creditors in favor of preserving their own ability to make a belated decision on what cryptocurrency activities required by the plan violate unspecified laws,” the committee said in its objection.

“In essence, the motion represents the government’s blatantly transparent attempt to (a) buy itself additional time at the expense of the debtors’ creditors to analyze and (in theory) subsequently determine the legality of certain transactions under the plan and (b) preserve its rights to retroactively prosecute the debtors and other estate professionals for their post-confirmation actions in these Chapter 11 cases that are specifically authorized by the confirmation order and required by the bankruptcy code.”

Notably, the court had said in its confirmation decision that the government’s position represents a “serious misunderstanding of just what it means when a court confirms a Chapter 11 plan.”

The committee said the court should deny the motion and permit the plan to go effective as soon as possible.

Voyager Digital is a cryptocurrency broker based in New York. The company filed bankruptcy on July 5, 2022 under Chapter 11 case number 22-10945.

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