Voyager Digital Ltd (VOYG:TSE) (VYGVF:OTCQX) today announced that it has launched a voluntary Chapter 11 process, saying it is doing so to maximize value for its stakeholders. After the announcement, Voyager’s stock price took a hit and fell almost 12%.
As part of the Chapter 11 process, Voyager and its subsidiaries, Voyager Digital LLC and Voyager Digital Holdings, filed voluntary petitions for Chapter 11 reorganization. The petitions were filed in the U.S. Bankruptcy Court for the Southern District of New York.
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Voyager is simply seeking recognition of Voyager’s Chapter 11 case in the Ontario Superior Court of Justice pursuant to the Company’s Creditors Arrangement Act.
Reasons for filing a request for reorganization
A Tweeter made by Voyager CEO Stephen Ehrlich reads:
“This comprehensive reorganization is the best way to protect platform assets and maximize value for all stakeholders, including customers.”
Stephen also added:
“Voyager’s platform was designed to empower investors to access crypto asset trading with ease, speed, liquidity and transparency. While I strongly believe in this future, the prolonged volatility and contagion on 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, compels us to take deliberate and decisive action now. of Chapter 11 provides an efficient and fair mechanism to maximize clawback.
According to the tweets, it was inevitable that Voyager would take the action it did due to the current volatility in the crypto markets which has destabilized a number of crypto businesses. Three Arrows Capital is one of the victims. On June 27, Voyager issued Three Arrows Capital with a notice of default for its $350 million loan in USDC and 15,250 BTC.
The draft reorganization plan
As soon as the proposed reorganization plan is implemented, access to the account will be resumed and value returned to customers. The plan, however, is subject to court approval and ongoing discussions with other parties.
According to the plan, customers with cryptocurrencies in their accounts will receive in exchange a combination of the cryptocurrencies in their account, the proceeds of the recovery made from 3AC, Voyager tokens and common shares of the newly reorganized company. . Customers will be able to decide the proportion of common stock and crypto they wish to receive, although subject to a certain maximum threshold.
On the other hand, customers with USD deposits in their accounts will be allowed to access their funds once a fraud prevention process and reconciliation has been completed by Metropolitan Commercial Bank.
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