Voyager: U.S. trustee files appeal to confirmation of Chapter 11 plan

By Sarah Lizee

Olympia, Wash., March 10 – Voyager Digital Ltd.’s Chapter 11 plan confirmation has drawn an appeal from Region 2 U.S. trustee William K. Harrington, according to documents filed Thursday with the U.S. Bankruptcy Court for the Southern District of New York.

As previously reported, the plan was confirmed on March 8.

Through the confirmation, the court overruled an objection from the Securities and Exchange Commission, which stated some activities proposed in the plan may create unspecified securities law violations.

In response to the objection, the debtors decided to amend the plan to make it clear that, to the extent it is ultimately necessary, the distributions under the plan are exempt from applicable securities laws under 11 U.S. code section 1145.

Activities and recoveries under the plan weren’t changed.

At the heart of the plan is Voyager’s intention to sell its assets and transfer its customers to BAM Trading Services Inc. (Binance US) in a transaction valued at roughly $1.3 billion.

The plan includes a toggle feature, under which the debtors may return cryptocurrency, cash and other assets to claimholders if the sale transaction is unable to close on time.

Under the plan, secured tax claims and $1 million of other priority claims are unimpaired.

The voting classes include the account holder claims ($1,763,800,000 of claims with a projected recovery of 50% if there is a sale transaction) and three subclasses of general unsecured claims ($6.6 million for OpCo with a 50% recovery, $15.7 million for HoldCo with a 1% recovery and $3 million with a 66% recovery for TopCo, with estimated recoveries based on a sale transaction).

Deemed to reject the plan, with impaired claims, are the Alameda loan facility claimants ($75.1 million with no recovery), section 510(b) claimants and existing equity interests.

Presumed to accept and not entitled to vote are claimants with intercompany claims and intercompany interests.

Should the sale not close and the debtors find it necessary to conduct a Chapter 11 liquidation, the claimants might expect to receive less, especially the account holder class which would be facing a 45% recovery on their claims.

Voyager Digital is a cryptocurrency broker based in New York. The company filed bankruptcy on July 5, 2022 under Chapter 11 case number 22-10945.

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