Voyager Chapter 11 Payment Plan Approved
Voyager Digital, a crypto brokerage firm that filed for Chapter 11 bankruptcy protection in July 2022, has received approval from the U.S. Bankruptcy Court for the Southern District of New York for its liquidation plan. The plan will allow the company to return about $1.33 billion in crypto assets to its customers, who have been unable to access their funds since the company filed for bankruptcy last year.
Voyager’s bankruptcy was triggered by a default on a large loan made to crypto hedge fund Three Arrows Capital (3AC), which was later ordered to be liquidated by a British Virgin Islands court. Voyager had also attempted to sell its assets to two crypto exchanges, FTX and Binance.US, but both deals fell through due to regulatory issues and fraud allegations.
Voyager Faced Many Difficulties
The company had initially agreed to sell its assets to FTX, a crypto exchange, for $1.42 billion, but the deal fell through when FTX collapsed into bankruptcy in November 2022. Voyager then tried to sell its assets to Binance.US, another crypto exchange, for $1.3 billion, but the deal was also called off on April 25, 2023, due to a “hostile and uncertain regulatory climate.”
According to Voyager’s court filings, they have estimated its assets and liabilities to be between $1 billion and $10 billion each, with over 100,000 creditors. The company plans to return about $1.33 billion in crypto assets to its customers and will receive about 35% of their cryptocurrency deposits as the initial distribution, which may be increased depending on the outcome of future litigation with FTX, which is seeking to recover $445.8 million in loan repayments made to Voyager before FTX declared bankruptcy.
1/ At today’s hearing, the Court approved the liquidation procedures. We are working with Voyager to go effective under the plan as soon as possible (as early as this Friday).
— Voyager Official Committee of Unsecured Creditors (@VoyagerUCC) May 17, 2023
Customers will be repaid with the same type of cryptocurrency they had in their accounts, except for unsupported cryptocurrencies and Voyager’s proprietary VGX token, which will be converted to the stablecoin USDC.
The case has raised questions about the risks and regulations of the crypto lending industry, which offers high-interest rates to borrowers and lenders but also exposes them to volatility and fraud in the crypto markets.