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“There are many potential legal issues of first impression.” — Joshua Sussberg, Kirkland & Ellis LLP Partner & Counsel to Voyager Digital Ltd.

Okay. If there’s one thing you, Voyager Account Holder, should be taking away from events this week, it’s that the “debtors” — Voyager Digital Ltd., Voyager Digital Holdings Inc. and Voyager Digital LLC — are thinking of you and your interests. That’s right. The debtors may have been crypto cowboys leading up to their chapter 11 bankruptcy cases — over-indulging on counter-party risk…

db @tier10k

3AC: From crypto royalty to blowing up publically traded companies in the space of a few months, going to be an amazing Netflix original

djo.eth @dylanorrelI

damn these new SAT questions are getting way too real

…to the point of driving themselves into bankruptcy court — but they care about you and your money.

Source: GIPHY

We’ve beaten this horse to death in past coverage but it bears repeating in this case more than any other chapter 11 bankruptcy case in recent memory: a debtor only has one opportunity to set the tone of a case and they do that in their initial bankruptcy papers. They then double down on that message in court at the “first day hearing,” knowing — especially now when hearings are readily available over Zoom or Court Solutions or whatever — that everyday Moms and Pops (or, in this context, Chads and Bryces) can be listening in to hear whatever they have to say. And even if Chad, Bryce, Chet or Jacque “Luna” LeDouche are not listening, counsel and company management also know that there’ll be media folks from Bloomberg, The Wall Street Journal, and several other media outlets chomping at the bit to report the salacious details of the latest cryptocurrency company implosion. And so let’s call things for what they are: a lot of the first day hearing is performance. Not, like, sing-the-Toys-R-Us-jingle-in-bankruptcy-court kind of performance, but dose-Ms.-Voyager-Account-Holder-with-some-bankruptcy-pixie-dust-mixed-with-indica-type-performance. Keep calm and carry on, y’all, you may not have any access to your money for an indeterminate amount of time but, yo, there’s a plan of reorganization on file!

Source: GIPHY

We don’t know: maybe we haven’t been paying attention but we can’t recall that many situations where the debtors posted their hearing presentation to the debtors’ claims’ agent website but that’s what Kirkland & Ellis LLP did here and, well, to great effect! We took the bait and helped them do some of their messaging:

💥PETITION💥 @petition

Here is the powerpoint offered by Voyager in its first bankruptcy court hearing.

Here is slide #19 of that presentation reflecting recoveries set forth in the plan:

Source: Voyager First Day Hearing Presentation Slide #19

Frankly, we’re not sure why the fine folks at Kirkland didn’t just use our graphic instead ⬇️. It’s much more realistic.

Source: PETITION LLC

The truth, however, is that the debtors’ other slides — slides #18 and #21, for instance — belie their message. They highlight how utterly illusory the proposed plan of reorganization is.

Source: Voyager First Day Hearing Presentation Slide #21

Source: Voyager First Day Hearing Presentation Slide #18

Sure, a plan is on file and sure it shows that there’ll be some potential path to recovery for customers but there are, as counsel acknowledged, a lot of novel legal issues at play that may hold things up a bit.

Counsel literally stated that the main reason to file the plan is so that customers can see that there’s focus on a path forward; that chatter that all hope is lost and there’ll be no recovery is erroneous based on assets on hand, e.g., (i) $100mm+ in cash and owned crypto assets plus (ii) $350mm of cash held in a “For Benefit of Customers” (FBO) account at Metropolitan Commercial Bank plus (iii) approximately $1.3b of customer crypto assets on platform plus (iv) claims against the now-liquidating Three Arrows Capital (3AC) of approximately $650mm (subject to the volatility of Bitcoin since the loan to 3AC was 15,250 BTC plus $350mm of USDC loan, the latter of which is allegedly 100% backed by cash and short-dated US Treasuries and redeemable 1-to-1 for US fiat); and that the debtors intend to push forward even if no third-party sponsors or purchasers emerge (and, on that latter point, thus far the debtors and their bankers, Moelis & Co., are striking out).

Great! So, again, when will the gates come up and money be released/distributed to customers?

Source: Tenor

Clearly a plan will need to be confirmed first. And before then a disclosure statement will need to be approved (one has not been filed). And there’s that pesky little issue that a big chunk of whatever recovery we’re talking about here is dependent upon the foreign liquidation of 3AC (and its proposed chapter 15 proceeding). So, you’re talking months before people re-gain access to their funds.

There are so many wild things at play here. Let’s dig in ⬇️:*