In a not-so-surprising move, Voyager Digital has filed for Chapter 11 bankruptcy and begun restructuring itself to meet its obligations as it pertains to both creditors and customers. The company announced it in a press release late Tuesday night.
Voyager Digital’s Fall
Late Tuesday night, the company announced that it had begun voluntary Chapter 11 proceedings in a U.S Bankruptcy Court for the Southern District of New York. The press release expresses that this was done in order to maximize value for all stakeholders.
The CEO of Voyager Digital, Stephen Ehrlich said:
“This comprehensive reorganization is the best way to protect assets on the platform and maximize value for all stakeholders, including customers… Voyager’s platform was built to empower investors by providing access to crypto asset trading with simplicity, speed, liquidity, and transparency.
He further added,
“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 (“3ACâ€) 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.â€
What’s the Way Forward
The company has enough funds to continue operating during this bankruptcy process with over $110 million in cash and crypto-assets on hand. The company holds over $1.3 billion in crypto assets on its platform, about $650 million in claims against the now-defunct Three Arrows Capital (3AC) and $350 million in cash in its For Benefit of Customers (FBO) account at Metropolitan Commerical Bank.
As announced by the firm, the company is doing everything in its power to recover its funds from 3AC, including pursuing legal avenues. Filing for a Chapter 11 bankruptcy allows the company to continue operating while nonetheless significantly restructuring its obligations. This is required to ensure that creditors will receive their money with minimal disruption.
Under the proposed restructuring plan, customers can reaccess their accounts. Customers with crypto in their accounts will receive some combination of the following when this plan goes into effect: crypto proceeds from the 3AC recovery, common stock in the newly reorganized company, and Voyager tokens.
While customers with USD in their accounts will be able to access those funds “after a reconciliation and fraud prevention process is completed with Metropolitan Commercial Bank.”
All activities like trading, deposits, withdrawals, and rewards will remain paused for the moment.
