Voyager filed a plan of reorganisation, citing prolonged volatility and contagion in the crypto markets and a default by Three Arrows Capital on a loan from its subsidiary.
Crypto lending platform Voyager Digital has filed for Chapter 11 bankruptcy in New York, proposing a reorganisation plan days after it suspended trading, deposits and withdrawals.
As per the petition filed by Voyager Digital, the company has over $110 million in cash and its own crypto assets on hand, which will provide liquidity to support day-to-day operations during the Chapter 11 process. In addition it has more than $350 million in cash in an account at the Metropolitan Commercial Bank for the benefit of customers.
Voyager also has $1.3 billion of crypto assets on its platform, plus claims against Three Arrows Capital (3AC) of more than $650 million.
Voyager, which is listed on the Toronto Stock Exchange, had previously said that its subsidiary, Voyager Digital, had issued a notice of default to 3AC for failure to make payments on its previously disclosed loan of 15,250 Bitcoin (BTC) and $350 million in stablecoin USDC.
The prolonged volatility and contagion in the crypto markets over the past few months and the default of 3AC on the loan require us to take deliberate and decisive action now, said Stephen Ehrlich, chief executive officer of Voyager. The Chapter 11 process provides an efficient and equitable mechanism to maximise recovery, he said.
According to Voyager’s proposed plan of reorganisation, customers with crypto in their account will receive a combination of the crypto in their account, proceeds from the 3AC recovery, common shares in the newly reorganised company, and Voyager tokens.
The plan also contemplates an opportunity for customers to elect the proportion of common equity and crypto they will get, subject to certain thresholds.
3AC, a cryptocurrency hedge fund, filed for Chapter 15 bankruptcy in a New York court on July 1 after a British Virgin Islands court ordered its liquidation. Chapter 15 allows for cooperation between the US and foreign courts during bankruptcy proceedings.
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