As Three Arrows Capital was ordered to liquidate and filed for bankruptcy protection due to insolvency, Voyager Digital, the “big creditor” of the cryptocurrency hedge fund , was also deeply affected. It only suspended user transactions, deposits and withdrawals last week. Today (6), it announced that it has filed for bankruptcy protection and started the financial restructuring process.
According to CoinDesk, in order to implement the reorganization plan, Voyager Digital Ltd. and its subsidiaries Voyager Digital Holdings, Inc. , Voyager Digital, LLC have voluntarily filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code in the Southern District Court of New York , and under the supervision of the United States federal court, the legal process of financial restructuring.
Voyager slams Three Arrows for defaulting on loan
Voyager’s subsidiary Voyager Digital LLC last week issued a notice of default to cryptocurrency hedge fund Three Arrows Capital, citing the counterparty’s failure to meet its obligations to repay a loan with $350 million in USDC and 15,250 bitcoins.
Blocker reported last week that Three Arrows Capital was ordered to liquidate by a British Virgin Islands court due to inability to repay its debts, and subsequently filed for Chapter 15 bankruptcy protection in order to protect the company’s U.S. presence during the liquidation process. assets, which means that Voyager may have no hope of recovering the loan.
Voyager CEO Stephen Ehrlich said in a July 6 Twitter post that long-term volatility in the cryptocurrency market, coupled with the default on loans by Three Arrows Capital, forced Voyager to act decisively.
Voyager is estimated to have more than 100,000 creditors, assets worth between $1 billion and $10 billion, and debts of $1 billion to $10 billion, according to Voyager’s bankruptcy filing .
Voyager launches restructuring process
Voyager said that once the proposed restructuring plan is implemented, access to accounts and the return of assets to customers will be restored.
Stephen Ehrlich continued that, all things considered, he believes that filing for Chapter 11 bankruptcy is the best way to protect the interests of clients. He assured that the move will protect assets on the platform and that Voyager will continue to operate.
Under the plan proposed by Voyager, customers who hold cryptocurrency in their accounts will receive a combination of cryptocurrency, proceeds recovered from Three Arrows Capital, common stock in the newly restructured company, and Voyager tokens.
Stephen Ehrlich also added that customers who hold U.S. dollars in their accounts will be able to access the funds after the reconciliation and fraud prevention process is completed with Metropolitan Commercial Bank in New York.
As part of the restructuring process, Voyager will also file a customary “First Day Motion” motion with the court, which, if approved, will allow Voyager to maintain day-to-day operations, including paying staff salaries and benefits, ensuring that staff and Programs for some customers will not be interrupted, but platform transactions, deposits, withdrawals and loyalty rewards will remain suspended.