Voyager Victim Asks Trustee To Take Control Of The Estate
The 120-page motion came from a creditor who wanted a chapter 11 trustee to be put in charge of Voyager because of fraud and lack of skill, according to the creditor.
A creditor of Voyager and a finance lawyer want a chapter 11 trustee to be named in the bankruptcy trial of crypto brokerage Voyager Digital. This would mean that Voyager would lose control of its estate.
In a motion filed on February 1, Voyager creditor Michelle DiVita said the company had “a history of financial statement inaccuracies and public misrepresentations that were known or could have been reasonably found out at the start of the bankruptcy proceeding.”
DiVita thinks that an examiner or trustee should have been asked for because of what happened before the bankruptcy. She is now asking for one herself.
The filing alleges that Voyager “concealed the true nature of its lending activities by publishing financial reports that materially understated its loan positions by more than $1 billion USD.”
@investvoyager loans disclosed on March 31 financial report: $2.2B.
Shigo Lavine, who used to be a director and CIO for Voyager, talked about some of the most important accusations in the filing in a long Twitter thread on February 1.
For example, Voyager may have underreported a loan to crypto hedge fund Three Arrows Capital by $609 million and undervalued Bitcoin in its financial reports by 546% to make the size of its loans look smaller.
According to the filing, the cryptocurrency exchange Coinbase also knew about Voyager’s “financial reporting inconsistencies” and backed out of a deal to buy Voyager’s assets because “the financials don’t add up.”
In bankruptcy proceedings, there is already a United States Trustee. This person is required to bring a motion to appoint a chapter 11 trustee when there are “reasonable grounds to suspect” that the debtor “participated in actual fraud, dishonesty, or criminal conduct.”
The U.S. Trustee’s duties include appointing a creditors committee and reviewing requests for professionals to be paid again. They may also hire a bankruptcy trustee to take care of the debtor’s business if the debtor is not allowed to do so themselves.
Voyager and its creditors have resisted Alameda Research’s attempt to recover $446 million in debt repayments.
After filing for Chapter 11 on July 5, Voyager asked Alameda to pay back all of the loans it still owed. Alameda did so in full.
But in a court filing on January 30, Alameda tried to get the money back. They said that since they paid back the loans within 90 days of filing for chapter 11 bankruptcy, they could “claw back” the money for the benefit of Alameda’s creditors.
Voyager says that Alameda’s bid for Voyager’s assets, which it couldn’t honor, cost its creditors more than $100 million and caused them “substantial harm.” Voyager says that Alameda’s claim is now lower than those of its other creditors because of this.
