A Voyager creditor and finance lawyer wants to see a chapter 11 trustee appointed in crypto brokerage Voyager Digital’s bankruptcy trial, which would see Voyager lose control of its estate.
In a Feb. 1 motion, Voyager creditor Michelle DiVita accused Voyager of having a “history of financial statement inaccuracies and public misrepresentations that were known, or reasonably discoverable, at the beginning of the bankruptcy proceeding.”
Due to this pre-bankruptcy conduct, DiVita believes that an examiner or trustee should have been requested, and is now doing so 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.
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
A former director and CIO for Voyager, Shigo Lavine, highlighted some of the key accusations made in the filing in a lengthy Feb. 1 twitter thread.
For example, Voyager allegedly underreported a loan to crypto hedge fund Three Arrows Capital by $609 million and also undervalued Bitcoin (BTC) in its financial reports by 546% to downplay the size of its loans.
The Debtor provided assurances in regards to its ability to raise capital and meet liquidity requirements.
This led many (including myself) to incorrectly conclude that Voyager would be able to survive this despite 3AC going under pic.twitter.com/jjnloWDG7A
— Shingo Lavine (@shingolavine) February 1, 2023
According to the filing, crypto exchange Coinbase also caught wind of Voyager’s “financial reporting inconsistencies,” and had reportedly backed out of a potential deal to acquire the assets of Voyager after finding “the financials don’t add up.”
The bankruptcy proceedings already involve a United States Trustee, who 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.”
While the U.S. Trustee appoints a creditors committee and reviews applications for the recompensation of professionals amongst other duties, they may also hire a bankruptcy trustee to manage the debtor’s affairs if the debtors are not allowed to do…
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