financemagnates.com
According to court documents from this week, clients of the bankrupt crypto lender, Voyager Digital might have a chance to recover some of their funds. Under a preliminary deal with FTX US, a cryptocurrency exchange regulated in the United States, customers may be able to obtain over 70% of their accounts' initial value.
However, the preliminary deal would not be finalized until Voyager's creditors express their approval, Michal Wiles, the United States bankruptcy judge, said during a court hearing. "There's no part of this agreement that survives" if the tentative sale falls.
According to current arrangements, FTX US would pay out all priority claims in full, allowing the rest of the customers to recover more than 70% of their holdings. The value of accounts maintained by the bankrupt crypto lender has been frozen since July 1.
Almost Four Months of Voyager's Bankruptcy Case
The problems of Voyager began four months ago when, due to liquidity issues, it was forced to file for Chapter 11 bankruptcy on July 4. The bankruptcy followed the earlier default of Three Arrows capital, a cryptocurrency hedge fund.
Although FTX US won a bid to acquire Voyager Digital's crypto assets, the deal valued at $1.4 billion is still in the preliminary phase. Thanks to a clause named "fiduciary out," Voyager still has a chance to cancel current agreements if any company other than FTX would present an offering with a better outcome for current creditors. It is often practiced in such cases and allows firms to look for higher bidders before the finalization of the sale.
However, if the deal is finalized as it currently stands, then Voyager customers will be able to transfer to the FTX US platform. New York-Based bankrupt crypto lender had over 3.5 million users (according to March 2021 data) and 1.19 million funded accounts.