Crypto lending platform Voyager Digital restarted fund withdrawals after almost a year of suspension as investors and creditors rushed to take in more than $250 million in three weeks. Since filing for Chapter 11 bankruptcy, the firm said on June 23 that withdrawals would resume, allaying users’ fears.
Due to the turbulence in the cryptocurrency markets, Voyager was one of many crypto lenders to file for bankruptcy protection in 2022. Others were Genesis Global Capital, Celsius Network, and BlockFi. A significant loan made to the cryptocurrency hedge firm Three Arrows Capital [3AC] went bad, which made the situation worse.
Voyager Digital’s financial woes began after the implosion of the Terra ecosystem, which inflicted substantial damage on investors, eroding over $40 billion of their funds. To top that, widespread withdrawals in the crypto-lending space sparked a bank run, leading to an acute liquidity crisis.
Under the direction of CEO Steve Ehrlich, the publicly traded entity with headquarters in Canada disclosed liabilities ranging from $1 billion to $10 billion during its bankruptcy case.
The recovery of funds for Voyager users is also heavily reliant on the outcome of the legal dispute with FTX, in which the former is attempting to retrieve almost $446 million in loan repayments paid to it prior to FTX’s bankruptcy. Customers’ anticipated reimbursement would increase to 63.74% if the lending firm completely wins the FTX litigation, per court documents.
At a court hearing in Manhattan, U.S. Bankruptcy Judge Michael Wiles green-lighted Voyager’s liquidation plan, enabling the business to restore around $1.33 billion in cryptocurrency assets to consumers and put a stop to its Chapter 11 reorganization efforts.
Voyager’s Legal Fees Pile Up
The Chicago-based law firm Kirkland & Ellis recently charged Voyager and associated debtors a total of $27.97 million for legal services rendered between July 5, 2022, and May 19, this year. According to the document, the debtors have already given Kirkland & Ellis compensation of $23.38 million.
Voyager is not the only business dealing with significant costs throughout its bankruptcy procedures. As was previously reported, from February 1 to April 30, FTX spent more than $120 million on financial and legal consulting costs.