Bankrupt Voyager Digital Raises $484M for Creditor Reimbursement

Bankrupt crypto lender Voyager Digital disclosed in Tuesday, April 9, filing with New York’s Southern District court that it secured $484M from the concluded series of settlements from Three Arrows Capital (3AC), FTX, alongside the Directors and Officers (D$O) insurance. 

The filing profiled the funds alongside the accrued interest to account for 25% of the creditor’s aggregate claims the embattled digital lender anticipates to disburse shortly. The filing considers the secured funds a critical milestone as the crypto lender eyes financial recovery while reimbursing the creditors. 

Voyager Confirms $445M Reclaimed from FTX

The April 9 filing in the bankruptcy court by Voyager attributes the majority of the reclaimed funds, nearly $445M, as from the recent settlement with embattled FTX. 

Voyager Digital sought Chapter 11 bankruptcy protection back in July 2022. The crypto lender plunged into crisis following the several shocks experienced by the crypto market following the Terra ecosystem collapse in May. Voyager would lead to the wave of bankruptcies that hit the digital assets space following the sudden implosion of the crypto exchange FTX in November 2022. 

The Voyager Digital crisis would deepen in October 2023 when the Federal Trade Commission (FTC) and Commodity Futures Trading Commission (CFTC) leveled parallel charges against the lender’s former chief, Stephen Ehrlich, alleging fraudulent statements. 

Voyager Digital is upbeat on recovery, with the $450M settlement headed for disbursement to pay off 25% of the creditors’ aggregate claims. 

Voyager Digital Secures $20M Settlement from 3AC

Besides the FTX agreement, Voyager Digital revealed obtaining a claim of approximately $675M from the present litigation with 3AC. The amount comprises $20.43M being the lender’s proportionate share of the initial distribution from the Three Arrows Capital. 

The administrator steering the Voyager’s estate anticipates subsequent payments will help reimburse the creditors. The administrator is optimistic about securing litigation settlements and selling assets to boost reimbursements. In particular, the administrator hailed the settlement realized via D&O insurance, winning $14.35 towards the Voyager for distribution to the creditors. 

The Voyager’s progress in its financial recovery features several operational hurdles, primarily from multiple uncashed checks. A recent update by the lender revealed that an estimated 270,000 checks amounting to $17M are uncashed. The lender issued the April 20 deadline, whose expiry would necessitate voiding the uncashed checks. 

Voyager is struggling to shake off the repercussions of the FTX data breach. While the lender is embroiled in the ongoing investigation, the process is yet to locate the origin and consequences leading to compromised creditor data.

The journey to settle the creditors’ claims saw the administrator propose a restructuring plan in May last year. The proposal indicated that customers would recover 35.7% of the claims in cash or crypto. Also, the crypto firm would, in November, settle with the FTX for $1.65 billion in monetary relief.

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