After Hedge Fund Three Arrows Capital defaulted on a $650 Million loan from Voyager, Voyager filed for Chapter 11 Bankruptcy protection while it attempted to reorganize [See, e.g. Nagoda, K. Chapter 11 Bankruptcy For Voyager Digital - Another Victim Trying to Reorganize. (Accessed July 25, 2022)]. Then, just this past Friday, companies all tied to Sam Bankman-Fried, threw out a life-preserver for the benefit of Voyager’s customers. Essentially, this deal “would see Alameda would assume all of Voyager’s assets and use FTX or FTX US to sell and disperse them proportionally to users affected by the bankruptcy” [Newar, B. Voyager rejects Alameda buyout offer, as it ‘harms customers’. (Accessed July 25, 2022); for further information on the deal see Nagoda, K. If Approved (and Thanks to FTX) Voyager Digital Customers Can Get Some Assets Back Early. (Accessed July 25, 2022)].

However, this FTX/Alameda buyout offer seems to have sparked the ire of Voyager’s attorneys, who have rejected the offer “on the grounds that the actions ‘are not value-maximizing’ and potentially 'harms customers” [Newar, supra]. On Sunday, Voyager’s attorneys filed a Notice of Response to Alameda/FTX Press Release, blasting the Alameda offer.

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[A full copy of this Response may be accessed by clicking here].

“In the letter, Voyager said that publicizing such offers might put other prospective acquisitions at risk. FTX actions undermine a coordinated, private, competitive bidding process. The letter also states, 'AlamedaFTX violated various commitments to the Debtors and the Bankruptcy Court” [Irene, N. Voyager declines Alameda’s buyout offer, saying it “harms clients”. (Accessed July 25, 2022)]. More specifically:

Hopefully customers understand that public dissemination of proposals that subvert a coordinated, confidential, competitive bidding process can have the effect of chilling bidding. AlamedaFTX’s actions are not value maximizing. Nevertheless, since the Proposal is now public, we encourage all of our creditors and customers to read it. Really read it. And understand it with the benefit of the following analysis. The AlamedaFTX proposal is nothing more than a liquidation of cryptocurrency on a basis that advantages AlamedaFTX. It’s a low-ball bid dressed up as a white knight rescue. To anyone who reads the Proposal even in a cursory way, it will be
obvious that the stand-alone Plan that Voyager filed is capable of delivering far more value to customers than the AlamedaFTX proposal—which transfers significant value to AlamedaFTX, and completely eliminates the value of assets that are of no interest to AlamedaFTX.

[Voyager Attorneys. Notice of Response to Alameda/FTX Press Release. (Accessed July 25, 2022)].

The Response goes on to offer The Voyager Attorney’s view as to why the Alameda/FTX proposal causes harm to customers:

• First, the way in which the AlamedaFTX Proposal was made chills bidding and undermines efforts to maximize value that are inherent in a competitive process.
• Second, the cover letter attached to the Proposal suggests that AlamedaFTX believes customer claims based on cryptocurrency investments are “capped” at the U.S. dollar value of those investments on July 5, 2022. Voyager disagrees with the premise of AlamedaFTX’s cover letter, and Voyager’s proposed stand-alone plan is clear that customer claims are not “capped.”
• Third, the Proposal requires converting and paying cryptocurrency claims in U.S. dollars. But it ignores the tax consequences of the transaction—customers may have
  to pay capital gains or other tax on distributions, diluting their recovery. By contrast, Voyager’s stand-alone plan, as proposed, does not aim to dollarize customer claims.
• Fourth, the Proposal would effectively eliminate the VGX token, which Voyager believes would destroy in excess of $100 million in value immediately.
• Fifth, the Proposal declares that there is no value in the Voyager platform and intellectual property, but simultaneously requires a downward price adjustment if Voyager chooses to keep it and sell it to a third party, which makes no sense.
• Sixth, the Proposal burdens Voyager (and customers) with both migration and winddown expenses, while requiring customers to set up an account on the FTX platform

[Voyager Attorneys, supra].

This Response goes further to illuminate three instances where the Alameda/FTX proposal makes false and misleading assertions as follows:

• First, AlamedaFTX states that it will “write-off” its $75 million loan in an effort to provide additional recovery to customers. Voyager believes that AlamedaFTX’s loan is already structurally subordinated to customer claims—it is not entitled to a recovery on account of its loan unless customers are paid in full first. Indeed, AlamedaFTX’s publicly stated rationale for providing the $75 million revolver was to protect customers, which is directly contrary to the suggestion in the Proposal that the loan is now somehow pari passu with customer accounts. Accordingly, Voyager’s proposed stand-alone plan provides that AlamedaFTX will not receive any distribution. The $75 million “write-off” in the Proposal does not increase customer recoveries at all.
• Second, the Proposal states that AlamedaFTX “is open to including or excluding [FBO cash accounts] from the transaction, as best for customers.” But cash held in the FBO account is not property of Voyager and is instead property of its customers. Voyager filed a motion to honor withdrawals by customers from the FBO account, which will be heard by the Bankruptcy Court on August 4, 2022. If approved by the Bankruptcy Court, Voyager will work with Metropolitan Commercial Bank to allow customers to withdraw their cash from the FBO account as quickly as possible. It is at best unclear how the FBO account would be handled by AlamedaFTX under the Proposal, and addressing that issue would be critical if the Proposal were otherwise viable. But because Voyager has already sought to resolve customer cash in the FBO account, inclusion or exclusion of FBO accounts from the Proposal is irrelevant.
• Finally, AlamedaFTX states that it “does not ascribe independent value to the Voyager brand or intellectual property.” Voyager strongly disputes this statement, which we do not believe even AlamedaFTX believes. Voyager continues to market a sale of its business to potential strategic investors and will continue working to maximize the value of its business. By insisting that it acquire such assets in the Proposal, but refusing to pay for them, AlamedaFTX proposes to pay a reduced price for Voyager’s business, further reducing any distributions to customers.

[Id].

The Response closes with some rather terse language regarding Alameda/FTX:

In the interim, many third parties have speculated that AlamedaFTX—because of its various relationships with Voyager, including as creditor, lender, and equity holder—had an “inside track” to acquire Voyager on some type of sweetheart transaction terms. Nothing could be further from the truth as evidenced by this response. Voyager’s process will not be obstructed by anyone, including Alameda/FTX.
By making its Proposal publicly in a press release laden with misleading or outright false claims, AlamedaFTX violated many obligations to the Debtors and the Bankruptcy Court. Voyager reserves all rights and remedies against AlamedaFTX for its clear and intentional subversion of the bankruptcy process and the damages that may be suffered by customers and other creditors as a result. Voyager will remain steadfast in its restructuring process, continuing to work toward a value-maximizing transaction that is beneficial to Voyager’s customers and stakeholders.

[Id].

Accordingly, it is the clear position of Voyager’s Attorneys that “that their own proposed plan to reorganize the company is better as they say it would promptly deliver all of their customers’ cash and as much of their crypto as possible” [Newar, supra].

“In a series of tweets sent at the end of the day on July 24, Bankman-Fried reiterated the logic behind his FTX’s intention to acquire Voyager. He claimed that Voyager clients have already been through enough. Thus, they should be able to retrieve their assets sooner rather than later” [Irene, supra].

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