As per Voyager’s proposed recovery plan, it is going to pay users in cryptocurrencies, Voyager tokens, “common shares in the newly reorganized company,” and funds coming from the proceedings of 3AC.
Last week on July 5, Voyager Digital filed for Chapter 11 bankruptcy facing a severe liquidity crisis during the brutal bear market and failure of payment from Three Arrows Capital. Since then, Voyager Digital has been working on its restructuring plan. On Monday, July 11, the company provided additional details about its plans. In the blog post, Voyager said that its recovery plan seeks to protect its customers’ capital. However, it didn’t explicitly mention that it would return equivalent funds to all affected investors.
Recovery Plans of Voyager Digital
Voyager said that it has a total of $1.3 billion in affected user funds. This was in addition to the $680 million of claims against beleaguered hedge fund Three Arrows Capital (3AC). After the court gives a nod to Voyager’s proposed recovery plan, its users will receive a combination of cryptocurrencies, Voyager tokens, “common shares in the newly reorganized company,” and funds coming from the proceedings of 3AC.
In its official announcement, the bankrupt crypto lender said:
“The exact numbers will depend on what happens in the restructuring process and the recovery of 3AC assets. The plan is subject to change, negotiation with customers, and ultimately a vote […] We put together a restructuring plan that would preserve customer assets and provide the best opportunity to maximize value.”
Voyager’s Restructuring Plans
Voyager said that its customers will get the opportunity to vote on the proposed Plan of Reorganization. It has put together a restructuring plan which will focus on preserving customer assets and maximize its value.
Along with the crypto assets, Voyager said that it’s holdings fund “equal to the amount of USD in customer accounts” at the Metropolitan Commercial Bank of New York. These are the special FDIC-insured accounts.
However, FDIC guarantees protection up to $250,000 per customer in case the bank fails, but not the lending firm. Voyager said that it has been currently working to “restore access to USD deposits”. However, it is subject to a fraud prevention process.
Last month, Voyager issued a default notice to embattled hedge fund Three Arrow Capital. It also cited 3AC’s inability to repay the funds as the reason behind them halting trading, deposits, and withdrawals, for Voyager users.
Voyager announced that it has borrowed 15,000 BTC or nearly $500 million from Alameda Research.
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
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