The crypto ecosystem shows solidarity! As Voyager Digital continues to sink further, FTX Trading makes a joint proposal to Voyager Digital to regain liquidity. If approved by the court, the clients of the bankruptcy broker will be able to recover part of their claims.
Founded in 2017, Voyager Digital is a specialist in cryptocurrency loans. Due to bear market, but especially from the collapse of the Terra ecosystem and the investment fund Three Arrows Capital, its financial situation has deteriorated sharply. Remember that it is none other than the 3AC’s first collateral victim. The latter did not repay a loan of 673 million dollars.
As a result, the company voluntarily filed for US bankruptcy with the Southern District of New York Court on July 6th. This means that it has recourse to the protection offered by the Chapter 11 of the Bankruptcy Act. It’s about a procedure allowing a company that files for bankruptcy to reorganize and reach an agreement with all the participating creditors. At the same time, the plaintiff benefits from the protection of a federal court – in this case that of New York. As part of this procedure, the liabilities of Voyager Digital are estimated between 1 and 10 billion dollars.
In this context, FTX Trading announces that it is making a joint proposal with FTX US, West Realm Shires Inc. and Alameda Ventures. The goal is that Voyager Digital find cash. Rapidly. Of course, the offer must first be approved by the bankruptcy court. This is why this procedure protects the interests of society. Because in the event of an unfair proposal, it cannot be accepted.
Cash advances – The content of the joint proposal
As mentioned, the objective of the proposal is for Voyager Digital to have anticipated cash. Caregivers want to limit consumer losses as they are exposed to prolonged illiquidity risk. And without any right of inspection.
“Voyager customers have not chosen to be bankrupt investors with unsecured debt. The goal of our joint proposal is to help establish a better way to resolve an insolvent crypto business – one that allows clients to get quick cash and recover some of their assets without forcing them to speculate on the results of bankruptcy and to take unilateral risks. »
Sam Bankman-Fried, CEO of FTX, press release.
To achieve this, the parties propose to enter into a “Liquidity and Asset Purchase Agreement for Customers”. Customers could recover part of their receivables by opening an FTX account. Specifically, the letter from the law firm Sullivan & Cromwell LLP indicates that the “Voyager customers would receive at least partial liquidity immediately, and the ability to withdraw that liquidity or reinvest it freely in digital assets of their choice. »
This last point is confirmed in the FTX press release. It is written :
“Under the joint proposal, Voyager customers would have the option of opening a new account at FTX with an opening cash balance funded by an early distribution on a portion of their bankruptcy claims. Customers would be able to withdraw their money immediately, or use it to purchase digital assets on the FTX platform. »
FTX press release.
A liquidity plan for Voyager Digital divided into two parts
The help plan is divided into two parts:
- Firstly Alameda Research buys Voyager’s digital assets and digital asset loans (excluding those of Three Arrows Capital, lawsuits already pending) in immediately available cash and at market value. Then, Alameda will pay the cash value of Voyager’s digital assets in escrow.
- On the other hand, Voyager customers can open an FT accountX to receive this money. They can then withdraw it without barriers or locks, or reinvest it in the cryptocurrencies of their choice. Additionally, FTX waives the first month of trading fees for Voyager customers who buy cryptocurrencies instead of withdrawing their money.
A proposal subject to court approval
The joint proposal is forwarded to the new bankruptcy court York to rule on. This constraint is mandatory in the Chapter 11 protection regime.
FTX and the other parties are aware that the proceedings may be seriously delayed by the approval of the judges. However, they hope to close the deal as soon as possible and to “preferably at the beginning of August”. In the meantime, a response from Voyager Digital is expected before July 26 so that the documentation is ready before July 30.