Voyager Bankruptcy A Real Challenge For Creditors


Voyager on track 

Voyager Digital, a crypto broker that filed for bankruptcy protection in July 2022, is on track to wind up its operations by selling its assets to Binance US. Lawyers for Voyager have reported that 97% of creditors have so far voted in favor of the plan, which aims to provide the best deal for creditors. The plan includes the preclusion and permanent injunction of any person or entity who has a legal claim against Voyager that predates confirmation of its restructuring plan from interfering with the use and distribution of the debtor’s assets in the manner contemplated by the plan.

Voyager initially agreed to sell itself to FTX but reopened the bidding process after the collapse of Sam Bankman-Fried’s exchange in November 2022. Binance US swooped in with the winning offer in December, and if the plan is confirmed, the FTC could be technically barred from pursuing legal action or issuing fines against Voyager and its former employees. The FTC has objected to the restructuring plan, saying it would unlawfully bar the company from being held accountable for “actual fraud, willful misconduct, or gross negligence.” The plan is set to be confirmed on March 2.

A real challenge

Voyager’s bankruptcy process has been challenging for creditors, who have been through a roller coaster of a bankruptcy process so far. The collapse of Three Arrows Capital, a crypto hedge fund, hit Voyager hard, and it filed a default notice for 3AC’s outstanding loans, which totaled $673 million. Voyager filed for bankruptcy and began its restructuring process days later. In August, Judge Wiles approved a motion for Voyager to return $270 million to clients, leaving more than $1 billion worth of assets to be distributed among creditors. Voyager announced that Sam Bankman-Fried’s trading desk, Alameda Research, had acquired its distressed assets by September. But when FTX itself collapsed in November, Alameda went down with it, and Voyager had to scrap that plan.

Voyager’s restructuring plan has undergone multiple revisions since August, with the third plan filed in December 2022. The FTC takes issue with the wording in the latest revision, which estimates that Voyager customers and creditors will see at most a 51% recovery of their assets. In a court document, FTC attorney Katherine Johnson wrote that the FTC has been investigating Voyager Digital “for their deceptive and unfair marketing of cryptocurrency to the public.” She called the plan a “disguised discharge,” and if it is confirmed as written, the FTC could technically be stopped from pursuing legal action or issuing fines against Voyager and its former employees.

Despite the FTC’s objections, Voyager’s attorneys have said that the plan is “on track,” and they do not anticipate any obstacles. The attorneys expect to be before the bankruptcy judge again on March 2. Voyager’s restructuring plan remains subject to court approval, and creditors will be closely watching the outcome. If the plan is confirmed, it will provide some resolution to the creditors and bring closure to Voyager’s turbulent bankruptcy process.

Moving Forward

FTC objections aside, Voyager Digital’s restructuring plan appears to be moving forward, with the majority of creditors voting in favor of the sale of assets to Binance US. This sale is expected to be confirmed on March 2, and if all goes according to plan, it will bring an end to Voyager’s bankruptcy process.

The company had been hit hard by the collapse of crypto hedge fund Three Arrows Capital, which left Voyager with outstanding loans totaling $673 million. After filing for bankruptcy, Voyager began its restructuring process, which has included three attempts at a bankruptcy restructuring plan.

Voyager’s attorneys have stated that they do not anticipate any obstacles to the sale of assets to Binance US, and that they expect the plan to be confirmed on March 2. If this happens, Voyager’s bankruptcy process will come to an end, and the company will be able to move forward under new ownership.

The sale of Voyager’s assets to Binance US is expected to offer the best deal for creditors, who have been through a rollercoaster of a bankruptcy process over the past several months. While the sale will not result in a full recovery of assets for all creditors, it is expected to offer a significant recovery for many.

Overall, the restructuring of Voyager Digital has been a complex and challenging process. However, with the sale of assets to Binance US on track to be confirmed, it appears that Voyager will be able to move forward and continue to operate in the cryptocurrency industry. While there may still be challenges ahead, the company’s restructuring efforts have so far been successful, and it seems likely that Voyager will emerge from bankruptcy stronger and more resilient than ever before.

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