The corporation announced Tuesday evening that it initiated bankruptcy proceedings in the United States Bankruptcy Court for the Southern District of New York.
Key Takeaways
- Voyager Digital has initiated Chapter 11 bankruptcy proceedings in New York’s Southern District.
- The firm announced in a press statement that it was seeking a reorganisation to make its creditors and consumers whole.
- Voyager has substantial exposure to Three Arrows Capital, which has also filed for bankruptcy.
Voyager Digital filed for Chapter 11 bankruptcy and began reorganising the business to satisfy its commitments to creditors and consumers. The firm announced the news in a press statement on Tuesday night.
Crypto brokerage Voyager Digital files for Chapter 11 bankruptcy protection. Image: Justin Sullivan | Getty Images
Bon Voyage
Voyager Digital said late Tuesday night that the company initiated voluntary Chapter 11 proceedings in the United States Bankruptcy Court for the Southern District of New York. According to the news release, Voyager’s action is to “maximize value for all stakeholders.”
“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. 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 (“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.”
Voyager asserts that it has more than $110 million in cash and crypto assets to maintain its operations throughout the Chapter 11 procedure. It also has about $350 million in cash in its For Benefit of Customers (FBO) account at Metropolitan Commercial Bank, around $1.3 billion in crypto assets on its platform, and over $650 million in claims against the bankrupt Three Arrows Capital (3AC). The firm indicated that it was actively seeking all possible measures to recover its cash from 3AC, including legal action.
A Chapter 11 bankruptcy enables a business to continue operations while reorganising its liabilities considerably. This restructuring must serve the best interests of the company’s creditors.
The suggested reorganisation strategy aims to restore consumer account access. Customers having cryptocurrency in their accounts would get a mix of their crypto holdings, money from the 3AC recovery, common shares in the newly restructured firm, and Voyager tokens.
Customers having USD in their accounts would have access to their monies “after [a] reconciliation and fraud prevention process is completed with Metropolitan Commercial Bank.”
Trading, deposits, withdrawals, and incentives remain suspended on the platform.