Crypto lender Voyager sends $1.42 bln FTX sale to creditor vote

(Reuters) – Bankrupt crypto lender Voyager Digital received initial court approval on Wednesday for a $1.42 billion sale of its assets to exchange platform FTX, allowing Voyager to solicit creditor votes on the proposal.

U.S. Bankruptcy Judge Michael Wiles in Manhattan said during a court hearing that he would approve Voyager’s sale contract and creditor solicitation materials, once Voyager makes certain changes clarifying that the company remains open to higher and better offers than the FTX bid.

Wiles said that the sale would not become final until it is approved by creditors as part of a Chapter 11 bankruptcy plan.

“If the plan falls apart, there’s no part of this agreement that survives,” Wiles said.

FTX made the winning bid after a two-week auction held in September. The sale, if approved by creditors, would move most Voyager customers to accounts on FTX’s platform. They would recover 72% of the cryptocurrency assets that they held with Voyager before its bankruptcy filing, although the value of those cryptocurrency assets may have diminished in the time since Voyager filed for Chapter 11.

Voyager accountholders are the primary creditors in the bankruptcy, with claims worth $1.76 billion, according to court documents.

Creditor votes are due by Nov. 29, and Voyager intends to seek final approval of the sale during a confirmation hearing in December.

Voyager filed for bankruptcy protection in July, citing volatility in cryptocurrency markets and a default on a large loan made to crypto hedge fund Three Arrows Capital (3AC). Voyager is still pursuing repayment from 3AC, which is also bankrupt, and that effort could potentially bring in additional funds for Voyager’s customers, according to court documents.

Voyager had lost significant value during an industry-wide cryptocurrency slump caused by the collapse of the Terra Luna stablecoin in May 2022 and stopped customers from withdrawing their crypto assets shortly before its bankruptcy filing.

The case is In re: Voyager Digital Holdings Inc., U.S. Bankruptcy Court for the Southern District of New York, No. 22-10943.

For Voyager: Joshua Sussberg, Christopher Marcus and Christine Okike of Kirkland & Ellis

For the official committee of unsecured creditors: Darren Azman of McDermott Will & Emery

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