Voyager Digital creditor requests trustee to seize control of the estate
- A Voyager creditor has requested a chapter 11 trustee to partake in the bankruptcy trial of Voyager Digital.
- Previously, Voyager and its creditors resisted Alameda Research’s attempts to recoup $446 million in loan repayments.
A Voyager creditor and finance lawyer has requested the involvement of a chapter 11 trustee in the bankruptcy trial of crypto brokerage Voyager Digital. This could result in Voyager losing control of its estate.
In a motion issued on 1 February, Voyager creditor Michelle DiVita accused Voyager of a history of financial statement inaccuracies and public misrepresentations that were known, or reasonably discoverable, at the start of the bankruptcy.
DiVita believed that an examiner or trustee should have been requested because of this pre-bankruptcy behavior. Inasmuch, she was requesting one herself.
@investvoyager loans disclosed on March 31 financial report: $2.2B.
Actual loans on April 3: $3.1B
$1.1B concealed in one business day.
Releases are unconscionable @VoyagerUCC @DOJCrimDiv #VGX pic.twitter.com/dP8g9yvY48
— Michelle DiVita (@ChelleDiVita) January 13, 2023
Voyager has been accused of concealing the true nature of its lending activities by publishing financial reports that materially understated its loan positions by over $1 billion USD.
Shigo Lavine, a former Voyager director, highlighted some of the key allegations in the filing on Twitter on 1 February. Voyager allegedly underreported a $609 million loan to crypto hedge fund Three Arrows Capital. Moreover, it undervalued Bitcoin [BTC] in its financial reports by 546% to downplay the size of its loans.
🚨🚨Pro Se creditor @ChelleDiVita has filed a motion in the @investvoyager Bankruptcy calling for the appointment of a Chapter 11 Trustee. 🚨🚨
This filing is very significant. I'll be breaking it down here 🧵https://t.co/Y4twn7seT4 pic.twitter.com/Ot1dz7oJPI
— Shingo Lavine (@shingolavine) February 1, 2023
Coinbase aware of Voyager Digital’s misgivings
Crypto exchange Coinbase also became aware of Voyager’s financial reporting inconsistencies. It reportedly backed out of a potential deal to acquire Voyager’s assets after discovering the financials don’t add up.
Notably, the U.S. Trustee appoints a creditors committee and evaluates applications for professional re-compensation. Additionally, they may also recruit a bankruptcy trustee to oversee the debtor’s affairs if the debtors do not do so themselves.
Recently, Voyager and its creditors resisted an attempt by bankrupt trading firm Alameda Research to recoup $446 million in loan repayments. Alameda had sought to recover the funds in a 30 January court filing. Allegedly, they repaid the loans within 90 days of filing for chapter 11 bankruptcy. Thus, they sought to recoup these funds for the benefit of Alameda creditors.