Voyager Digital Files for Chapter 11, Seeks to 'Maximize Value for All Stakeholders'
US-based crypto platform Voyager Digital said it filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code as it seeks to implement its reorganization plan and "maximize value for all stakeholders."
Chapter 11 generally provides for reorganization, usually involving a corporation or partnership. A chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time.
Under Voyager's reorganization plan, customers with crypto in their account(s) will receive in exchange a combination of the crypto in their account(s), proceeds from the Three Arrows Capital (3AC) recovery, common shares in the newly reorganized company, and Voyager tokens. Meanwhile, customers with USD deposits in their account(s) will receive access to those funds after a reconciliation and fraud prevention process is completed with Metropolitan Commercial Bank, they added.
The company claims it has over USD 110m of cash and crypto on hand, in addition to more than USD 350m of cash held in the For Benefit of Customers account at Metropolitan Commercial Bank. Voyager also said it has approximately USD 1.3bn of cryptoassets on its platform, plus claims against 3AC of more than USD 650m. As reported, Voyager issued a notice of default to 3AC for failure to make the required payments on its previously disclosed loan of BTC 15,250 and USDC 350m.
"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 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 maximize recovery," Stephen Ehrlich, CEO of Voyager, was quoted as saying in the announcement.
As reported, last week, Voyager Digital, said it is "temporarily" suspending trading, deposits, withdrawals, and loyalty rewards.
"This decision gives us additional time to continue exploring strategic alternatives with various interested parties while preserving the value of the Voyager platform we have built together. We will provide additional information at the appropriate time," Ehrlich was quoted as saying back then.
Also as reported, the company's exposure to troubled crypto fund Three Arrows Capital consists of BTC 15,250 (USD 307) and USDC 350m, while they also entered into a multi-million credit line agreement with Alameda Ventures, a quantitative trading firm and the parent company of the FTX exchange.
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(Updated at 06:32 UTC: updates throughout the entire text.)