Thomas Daniels
In a landmark move emblematic of resilience and strategic navigation through financial adversities, Voyager Digital has announced the successful recuperation of $484.35 million. This financial recovery, emanating from settlements with FTX, Three Arrows Capital (3AC), and Directors and Officers (D&O) insurance, marks a pivotal chapter in the firm’s bankruptcy saga. The revelation, made to the United States Bankruptcy Court for the Southern District of New York on April 10, delineates a comprehensive status update concerning the restitution and distribution of assets to the creditors post the firm’s fiscal downturn.
A considerable fraction of the recouped funds, aggregating to approximately $450 million, originates from the settlement with FTX. This sum, inclusive of accrued interest, constitutes about 25% of the original claims lodged by Voyager creditors, with plans for imminent distribution. Moreover, in the ongoing proceedings against Three Arrows Capital, Voyager has staked a claim to an estimated $675 million, of which it’s entitled to a $20.43 million pro rata share from the initial distribution.
The path forward, as outlined by the plan administrator, signals the anticipation of additional payments as assets undergo liquidation and as litigation recoveries materialize over the ensuing years.
Contributing further to the creditors’ compensation, a settlement in the D&O insurance mediation is poised to infuse at least $14.35 million, showcasing another concerted effort to alleviate the financial duress endured by the company’s stakeholders.
Challenges persist, notably with approximately 270,000 uncashed checks totaling $17 million, a substantial number of which, approximately 187,000, represent amounts under $25. In an effort to streamline operations, the firm has set an April 20, 2024, deadline, post which all outstanding checks will be declared unclaimed and consequently canceled.
Complicating the bankruptcy narrative is a data breach incident, currently under investigation to pinpoint the breach’s origin and assess its comprehensive impact. This security lapse has compromised creditor information, thereby adding a layer of complexity to the ongoing bankruptcy proceedings.
Voyager’s journey through bankruptcy was initiated in July 2022 against the backdrop of a broader crypto credit crisis that afflicted several lenders and brokers. The company’s bankruptcy proposal received approval from the United States Bankruptcy Court for the Southern District of New York on May 17, 2023, subsequent to crypto exchange Binance.US retracting its bid to acquire $1 billion in assets from Voyager on April 25.
In a related development, October 2023 saw Stephen Ehrlich, co-founder of Voyager Digital, charged by the Commodity Futures Trading Commission (CFTC) for alleged fraud and regulatory non-compliance. The CFTC’s allegations against Ehrlich and Voyager pertained to deceptive practices concerning the firm’s financial stability as it teetered on the brink of collapse.
At the bankruptcy filing juncture, Voyager disclosed liabilities spanning $1 billion to $10 billion, underscoring the financial tribulations necessitating bankruptcy protection.
