Questions and answers: Restructuring expert talks about Voyager bankruptcy

Questions and answers: Restructuring expert talks about Voyager bankruptcy

Voyager registered bankruptcy according to Chapter 11 on Wednesday, and it is uncertain how dishes with bankruptcies will handle crypto loans such as Voyager-and possibly Celsius and Babel Finance.

Blockworks spoke to Ryan Dahl, Business Resentructuring Partner at Ropes & Gray, about what investors can expect when Voyager begins the bankruptcy proceedings.

Blockworks: Voyager registered bankruptcy according to Chapter 11 on Wednesday. What's next?

dahl: In the bankruptcy proceedings, the first step must be approved by the bankruptcy court. To do this, Voyager must provide the court in the form of a declaration of disclosure a number of information about the company and the reason why it registers bankruptcy. The company has not submitted a declaration of disclosure to this afternoon, and it is not clear when this will happen. A month or two generally pass between submitting the declaration of disclosure by the company and the decision of the court. However, if creditors have serious evaluation problems or questions about standards, the legal dispute can last for months and delay the confirmation.

As soon as the court has approved the declaration, the creditor can submit ballot papers in which they state whether they approve or reject the reorganization plan. It is likely, but not certain that a number of creditors will be involved in the insolvency proceedings by making their views about the submission-including Voyager's claim, FDIC-insured what happened in the end before Voyager has filed for bankruptcy, and how much Voyager offers its believing.

Blockworks: Why could creditors contradict the proposed repayment plan from Voyager?

dahl: The value that Voyager suggests all these people depends on how to evaluate these cryptocurrencies, because they promise to return the crypto given by the account holders. It is complicated if you evaluate an asset that has the extreme volatility of crypto, and there is no established legal work for the accepted evaluation practice for crypto. Take a look at the crypto spot prices or do what is done, for example, in the energy sector-where insolvency courts do complicated processes to examine future oil prices? We have not yet seen Voyager's evaluation, which is usually included in the declaration of disclosure.

Blockworks: A factor that will influence the repayment of Voyager is how much of his $ 650 million loan can be reclaimed to Three Arrows Capital. What can creditors expect from Voyager's loan.

dahl: The case has just been submitted, so we won't really know until the dust has laid. Anyone who claims to know how much Voyager can win back. The restoration rates in these types of measures can vary greatly. In the Bernie Madoff case, for example, the common opinion was that there would never be a real relaxation. In fact, the Madoff trust was quite effective in regaining a large part of the money of its creditors by pursuing a very successful process strategy, although its success only existed in the recovery of assets in a Ponzi system, so that the same legal theory does not apply here.

Ryan Dahl is a partner in the Business Restructuring Group from Ropes & Grey with experience in the representation of public and private debtors, needy investors and financial sponsors in special situations, extrajudicial restructuring and needy takeover as well as judicial chapter-11 processes through prefabricated, arranged and traditional Restructuring.

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