NEWS today. Reorganization to maximize shareholder value.
Voyager Digital files for Chapter 11 reorganization
2022-07-06 01:44 ET - News Release
Mr. Stephen Ehrlich reports
VOYAGER DIGITAL COMMENCES FINANCIAL RESTRUCTURING PROCESS TO MAXIMIZE VALUE FOR ALL STAKEHOLDERS
Voyager Digital Ltd. has commenced a voluntary Chapter 11 process to maximize value for all stakeholders. As part of this process, the company and its main operating subsidiaries filed voluntary petitions for reorganization under Chapter 11 in the U.S. Bankruptcy Court of the Southern District of New York. The company intends to seek recognition of the Chapter 11 case of Voyager Digital in the Ontario Superior Court of Justice (commercial list) pursuant to the Companies' Creditors Arrangement Act.
"This comprehensive reorganization is the best way to protect assets on the platform and maximize value for all stakeholders, including customers," said Stephen Ehrlich, chief executive officer of Voyager Digital. "Voyager's platform was built to empower investors by providing access to crypto asset trading with simplicity, speed, liquidity and transparency. While I strongly believe in this future, the prolonged volatility and contagion in the crypto markets over the past few months, and the default of Three Arrows Capital (3AC) on a loan from the company's subsidiary, Voyager Digital LLC, require us to take deliberate and decisive action now. The Chapter 11 process provides an efficient and equitable mechanism to maximize recovery."
The proposed plan of reorganization would, upon implementation, resume account access and return value to customers. Under this plan, which is subject to change given continuing discussions with other parties, and requires court approval, customers with crypto in their account(s) will receive in exchange a combination of the crypto in their account(s), proceeds from the 3AC recovery, common shares in the newly reorganized company and Voyager Digital tokens. The plan contemplates an opportunity for customers to elect the proportion of common equity and crypto they will receive, subject to certain maximum thresholds.
Customers with U.S.-dollar deposits in their account(s) will receive access to those funds after a reconciliation and fraud prevention process is completed with Metropolitan Commercial Bank.
The company continues to evaluate all strategic alternatives to maximize value for stakeholders.
The company has over $110-million of cash and owned crypto assets on hand, which will provide liquidity to support day-to-day operations during the Chapter 11 process, in addition to more than $350-million of cash held in the for benefit of customers (FBO) account at Metropolitan Commercial Bank. Voyager Digital also has approximately $1.3-billion of crypto assets on its platform, plus claims against Three Arrows Capital of more than $650-million.
Voyager Digital previously announced that its subsidiary, Voyager Digital LLC, issued a notice of default to 3AC for failure to make the required payments on its previously disclosed loan of 15,250 bitcoin and $350-million in U.S.-dollar coins. Voyager Digital is actively pursuing all available remedies for recovery from 3AC, including through the court-supervised processes in the British Virgin Islands and New York.
The company also announced the appointment of four new independent directors: Matthew Ray at Voyager Digital Ltd., Scott Vogel at Voyager Digital Holdings Inc., and Jill Frizzley and Timothy Pohl at Voyager Digital LLC. Information regarding their backgrounds and relevant experience is included at the end of this release.
As part of the reorganization process, the company will file customary first-day motions to allow it to maintain operations in the ordinary course. Voyager Digital intends to pay its employees in the usual manner and continue their primary benefits and certain customer programs without disruption. The company expects to receive court approval for all these routine requests. Trading, deposits, withdrawals and loyalty rewards on the Voyager Digital platform remain temporarily suspended.
Parties with questions about the Chapter 11 process may contact the company's claim agent, Stretto, at 1-855-473-8665 (toll-free in the United States) or 1-949-271-6507 (for parties outside of the U.S.). It has also set up a website which includes court documents and other information.
To effectuate the restructuring process, the company has engaged Moelis & Company and The Consello Group as financial advisers, Kirkland & Ellis LLP as legal adviser, and Berkeley Research Group LLC as restructuring adviser.
New independent directors to provide additional leadership and expertise
Mr. Ray joins as an independent director of Voyager Digital Ltd. Mr. Ray is the founder and managing partner of Portage Point Partners, where he has served as chief restructuring officer (CRO), chief executive officer (CEO), chairman, lead independent director, special restructuring committee chairperson, and strategic adviser leading wide-ranging transformations and restructurings for both private and public companies.
Mr. Vogel joins as an independent director of Voyager Digital Holdings. Mr. Vogel has broad experience sitting on numerous boards of directors for financially distressed companies in a diverse set of industries. Mr. Vogel carefully and skillfully manages complex situations, develops restructuring plans and postrestructuring organizational priorities, builds consensus amongst and between stakeholders and management, executes complex capital market and corporate transactions, facilitates clear lines of communication, and aligns management incentives to ensure accountability.
Ms. Frizzley joins as an independent director of Voyager Digital LLC. Ms. Frizzley is a corporate governance expert with significant experience serving on boards of directors and advising on corporate governance, restructuring, bankruptcies, and mergers and acquisitions. Leveraging over two decades of legal practice in financial restructuring and insolvency, Ms. Frizzley has a deep wealth of knowledge encompassing corporate, financial and governance matters across a wide range of industries.
Mr. Pohl joins as an independent director of Voyager Digital LLC. Mr. Pohl has extensive experience and expertise in all aspects of corporate restructurings and financing, mergers and acquisitions, valuation, liquidity and balance sheet assessment and analysis, capital markets, corporate law, restructuring law, and litigation. Mr. Pohl currently serves as a senior adviser in a number of situations, as well as an independent director for a number of corporations. Mr. Pohl has also advised across a wide range of industries, and has provided expert testimony on valuation and corporate and restructuring matters.
About Voyager Digital Ltd.
Voyager Digital's U.S. subsidiary, Voyager Digital LLC, is a cryptocurrency platform in the United States founded in 2018 to bring choice, transparency and cost-efficiency to the marketplace. Voyager Digital offers a secure way to trade over 100 different crypto assets using its easy-to-use mobile application. Through its subsidiary Coinify ApS, Voyager Digital provides crypto payment solutions for both consumers and merchants around the globe.
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