Voyager Digital, a US-based crypto brokerage, has recently commenced a voluntary Chapter 11 bankruptcy protection. The company and its main operating subsidiaries have filed voluntary petitions for reorganisation under Chapter 11 in the U.S. Bankruptcy Court of the Southern District of New York.
What exactly happened?
Voyager Digital has over $110 million of cash and owned crypto assets on hand. This will provide liquidity to support day-to-day operations during the Chapter 11 process, in addition to over $350 million of cash held in the For Benefit of Customers (FBO) account at Metropolitan Commercial Bank.
Voyager has nearly $1.3 billion of crypto assets on its platform and claims against Three Arrows Capital (“3AC”) of over $650 million.
Previously, the company announced that its subsidiary – Voyager Digital LLC, issued a notice of default to 3AC for failure to make the required payments on its previously disclosed loan of 15,250 BTC and $350 million USDC. Voyager is actively pursuing all available remedies for recovery from 3AC, including through the court-supervised processes in the British Virgin Islands and New York.
Besides, the company also appointed four new independent directors, including Matthew Ray at Voyager Digital Ltd.; Scott Vogel at Voyager Digital Holdings, Inc.; and Jill Frizzley and Timothy Pohl at Voyager Digital LLC. Information regarding their backgrounds and relevant experience is included at the end of this release.
The firm’s shares have lost nearly 98% of their value since the start of 2022.
What holds for the future?
Founded by Stephen Ehrlich, Philip Eytan, Gaspard de Dreuzy, and Oscar Salazar, Voyager said the move would allow it to implement a restructuring process so that customers can be reimbursed.
Voyager intends to pay its employees in the usual manner and continue their primary benefits and certain customer programs without disruption. The Company expects to receive court approval for all these routine requests. Trading, deposits, withdrawals and loyalty rewards on the Voyager platform remain temporarily suspended.
Customers with USD deposits in their accounts will receive access to those funds after a reconciliation and fraud prevention process is completed with Metropolitan Commercial Bank. The Company continues to evaluate all strategic alternatives to maximise value for stakeholders.
Customers with crypto in their accounts will receive in exchange a combination of the crypto in their accounts, proceeds from the 3AC recovery, common shares in the newly reorganized Company, and Voyager tokens.
Stephen Ehrlich, Chief Executive Officer of Voyager said, “Voyager’s platform was built to empower investors by providing access to crypto asset trading with simplicity, speed, liquidity, and transparency. While I strongly believe in this future, the prolonged volatility and contagion in the crypto markets over the past few months, and the default of Three Arrows Capital (“3AC”) on a loan from the Company’s subsidiary, Voyager Digital, LLC, require us to take deliberate and decisive action now. The chapter 11 process provides an efficient and equitable mechanism to maximise recovery.”