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Friday, December 2, 2022

Voyager Digital files for Chapter 11 bankruptcy, proposes recovery plan

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Days after pausing buying and selling, withdrawals and deposits, crypto alternate Voyager Digital is submitting for chapter underneath Chapter 11 within the Southern District Court of New York.

Voyager’s Chapter 11 chapter filing indicated that it’s on the hook for wherever from $1 billion to $10 billion in belongings to greater than 100,000 collectors.

The troubled crypto alternate wasted no time after the United States vacation to file for chapter on July 5. In a Wednesday statement,  Voyager defined that the transfer is a part of a “Plan of Reorganization.” When applied, the plan would allow shoppers to reaccess their accounts once more, and Voyager would “return value to customers.”

Voyager CEO Stephen Ehrlich acknowledged in a July 6 tweet that underneath its proposed plan, prospects with crypto of their account will obtain a mixture of crypto, proceeds from the Three Arrows Capital (3AC) recovery, frequent shares within the newly reorganized firm, and Voyager tokens.

He additionally added affirmation that prospects with U.S. {dollars} of their accounts will have the ability to entry these funds after a “reconciliation and fraud prevention course of is accomplished with Metropolitan Commercial Bank.”

In the identical Twitter thread,  Ehrlich stated he felt Chapter 11 was the very best route for his shoppers, contemplating all components, and guaranteed that the transfer would shield belongings on the platform and that Voyager will proceed working.

Voyager Digital files for Chapter 11 chapter in New York.

Voyager stated that a part of the reorganization course of will see the corporate submitting “First Day” motions that can permit it to take care of operations.

Related: Keys lost in the Vauld: Singapore crypto exchange freezes withdrawals

Voyager stated it intends to pay its staff within the standard method and proceed their “primary benefits and certain customer programs without disruption,” although buying and selling, deposits, withdrawals and loyalty rewards will stay suspended.

Signs that Voyager and its shoppers have been experiencing headwinds got here after the lending platform entered right into a $500 million mortgage settlement with buying and selling agency Alameda Research to cowl losses from its publicity to crypto enterprise capital agency 3AC.

A day later, the platform lowered its daily withdrawal limit to $10,000 after which, on July 1, introduced that it could be suspending buying and selling, deposits, withdrawals, and loyalty rewards distributions.

The firm’s subsidiary, Voyager Digital LLC, additionally beforehand issued a discover of default to 3AC for failure to make the required funds for its mortgage of 15,250 Bitcoin (BTC) and $350 million USD Coin (USDC).

However, Three Arrows Capital goes by way of Chapter 15 bankruptcy proceedings and has reportedly been forced to be liquidated by the British Virgin Islands, suggesting that it may very well be tough for Voyager to get better the funds it lent out.