A bankruptcy court in the United States has sanctioned the liquidation plans of the bankrupt crypto lender, Voyager Digital, permitting the firm to end its Chapter 11 reorganization efforts. Judge Michael Wiles gave the approval on Wednesday during a hearing in Manhattan, according to court documents seen by Reuters.
Tomorrow's hearing on the Liquidation Procedures will be going forward given that one creditor submitted a letter to the Court in response to the procedures. We will provide another update after the hearing concludes.
— Voyager Official Committee of Unsecured Creditors (@VoyagerUCC) May 16, 2023
Voyager Faces Liquidation
The crypto lender’s lawyers have previously said the firm will self-liquidate and shut down its operation after Binance.US abandoned a $1 billion deal to purchase the firm’s assets. The American arm of the leadingcryptocurrency exchange did not give a specific reason for backing out but hinted at “the hostile and uncertain regulatory climate in the United States.”
https://t.co/AZwoBOgsqS has made the difficult decision to exercise its right to terminate the asset purchase agreement with Voyager. While our hope throughout this process was to help Voyager's customers access their crypto in kind, the hostile and uncertain regulatory climate…
— Binance.US ???????? (@BinanceUS) April 25, 2023
Voyager filed for bankruptcy protection in July last year in the aftermath of the Terra-LUNA collapse which gripped the global cryptocurrency industry. Before its collapse, the crypto lender sent a notice of default to Singapore-based Three Arrows Capital (3AC) over its failed payments on a crypto loan of over $670 million. However, 3AC was affected by the downturn in the market and was later ordered by a British Virgin Islands court to liquidate its assets.
Furthermore, in September last year, crypto exchange FTX's US affiliate won a $1.4 billion deal to purchase the assets of Voyager Digital. However, the deal fell apart in the subsequent month after FTX’s collapse.
Voyager Reveals Customer Fund Recovery Expectation
Meanwhile, Voyager Digital in the new court filing said it expects its customers to be refunded about 35% of their crypto deposits in the wake of the planned liquidation. Reuters reports that Judge Wiles' approval of Voyager’s liquidation permits the bankrupt crypto lender to return about $1.33 billion in crypto assets to its customers.
On the other hand, as FTX presses on with its asset recovery effort, the equally bankrupt cryptocurrency exchange is seeking to retrieve about $445.8 million in loan repayments made to Voyager before its demise. Voyager winning the litigation could mean a higher 63.74% fund recovery rate for its customers, the court filing shows.
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This article was written by Solomon Oladipupo at www.financemagnates.com.
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