Crypto Broker Voyager To Pay Creditors $1.3B After Bankruptcy

Updated: 19 May 2023

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The U.S. Bankruptcy Court for the Southern District of New York has approved Voyager Digital, which filed for bankruptcy, to start the repayment process with its creditors.

In a significant development, Judge Michael Wiles has given the green light to Voyager’s liquidation plan, enabling the company to reimburse approximately $1.33 billion worth of cryptocurrency to its customers. This decision paves the way for the orderly resolution of Voyager’s bankruptcy proceedings and the return of funds to the affected parties.

Voyager Digital Approved for Liquidation Plan, Nearing Creditor Repayment

During the hearing, the Official Committee of Unsecured Creditors for Voyager Digital stated the Court had approved the liquidation procedures. They further mentioned that they are collaborating with Voyager to expedite the plan’s implementation, aiming for it to take effect as early as this Friday.

Following the implementation, the committee will be dissolved, and they expect to complete the initial distribution of funds by June 1 at the latest. This update signals a significant step forward in the reimbursement process for creditors, bringing them closer to receiving their funds from Voyager.

Following Binance.US’s withdrawal from a previously agreed-upon arrangement, Voyager Digital introduced its third bankruptcy plan on May 5. The company’s website shows that the estate currently holds $1.334 billion in assets, equivalent to 75.68% of the total value of customer claims against Voyager’s estate.

2/ After the plan becomes effective, the Committee will be dissolved and the Plan Administrator will take control of the Wind Down Debtor.

— Voyager Official Committee of Unsecured Creditors (@VoyagerUCC) May 17, 2023

However, customers should expect an initial payment of only 35.72% of their claims due to curtain holdbacks. Further distributions will depend on the outcomes of ongoing litigation, including the dispute over the “FTX/Alameda preference claim,” potential additional claims brought by the Voyager Plan Administrator against third parties, and any recovery made by the Voyager estate as a creditor in the Three Arrows Capital liquidation.

Crypto/Cash Payments to Creditors, USDC Reimbursement for Unsupported Cryptocurrencies

According to Judge Michael Wiles’ order, Voyager has revealed that initial payments to creditors will be made in cryptocurrency through the Voyager app or cash following a 30-day waiting period. For deposits held in unsupported cryptocurrencies that cannot be withdrawn from Voyager’s platform and Voyager’s VGX token, customers will be reimbursed with the USDC stablecoin.

The crypto broker filed for Chapter 11 bankruptcy in July 2022 after disclosing significant exposure to the failed crypto hedge fund Three Arrows Capital (3AC). Since then, Voyager has been working on strategies to return assets to investors.

Initially, there were talks of FTX acquiring Voyager’s distressed assets. Still, the deal fell through when FTX experienced a sudden collapse and filed for bankruptcy in November, causing turmoil in the crypto industry. Recently, Voyager agreed with the U.S. federal government to sell its assets to Binance’s American arm. However, the deal was called off after Binance.US withdrew from the agreement on April 25.

Voyager Digital Bankruptcy Proceedings and Fund Distribution

The Voyager Official Committee of Unsecured Creditors (UCC) announced they expect to return the funds stuck on the bankrupt crypto broker’s platform to creditors in the next few weeks. They stated that the liquidation procedures are nearing completion and expect to begin the distribution of funds soon.

Binance.US, which had initially agreed to purchase Voyager’s assets for $1.02 billion, reversed its decision because of the uncertain regulatory climate in the United States. Voyager’s restructuring plan empowers them to distribute cash and cryptocurrency directly to customers through their platform.

The UCC intends to investigate potential claims against Binance.US for their change of heart. Voyager must file the liquidation procedures with the U.S. Bankruptcy Court, and parties have a 10-day window to raise objections. In the absence of objections, Voyager’s plan will be implemented.