August 5, 2022 – The Court hearing the Voyager Digital Holdings cases issued an order: (i) approving proposed bidding procedures in respect of the sale of substantially all of the Debtors’ assets, (ii) authorizing the Debtors to select a stalking horse bidder, and offer bidder protections to any selected stalking horse, and (iii) approving an auction/sale timetable culminating in an August 29th auction and a September 8th sale hearing [Docket No. 248].
On July 5, 2022, Voyager Digital Holdings, Inc. and two affiliated debtors (Toronto Stock Exchange (TSX); “Voyager” or the “Debtors”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Southern District of New York," lead case number 22-10943. At filing. the Debtors, who offer crypto-currency brokerage services, noted estimated assets between $1.0bn and $10.0bn; and estimated liabilities between $1.0bn and $10.0bn.
At an August 4th hearing (see also our separate coverage of that hearing), the primary concerns raised in respect of the Debtors' sale process was its speed.
Judge Wiles, however, held that on balance there was good reason "to proceed as quickly as possible," and that the expedited timeline* sought be the Debtors could be adjusted at a later date if need be.
Judge Wiles did extend the "very short objection deadline" from September 2nd to September 6th.
The bidding procedures motion [Docket No. 126] reads, “…before the Petition Date, the Debtors faced a short-term ‘run on the bank’ due to the downturn in the cryptocurrency market and the 3AC default and subsequent liquidation. The Debtors commenced these chapter 11 cases to avail themselves of the benefits afforded under chapter 11, including a breathing spell to focus on ensuring a bright path forward that maximizes the value of their enterprise and for the benefit of all stakeholders.
Before the commencement of these chapter 11 cases, the Debtors and their proposed investment banker, Moelis & Company LLC (‘Moelis’), initiated a comprehensive marketing process to solicit interest in two general deal structures: (a) a Sale of the Debtors’ entire business; and (b) a capital infusion whereby a third party (individually or as part of a consortium) would provide the requisite funds necessary (a ‘Financing,’ and together with a Sale, a ‘Transaction’) to allow the Debtors to weather the current volatility and dislocation in the cryptocurrency industry.
This process, which is described in detail in the Declaration of Jared Dermont Regarding the Debtors’ Marketing Process and in Support of the Debtors’ Chapter 11 Petitions and First Day Motions [Docket No. 16], included an initial outreach to over 60 potential financial and strategic partners globally (‘Potential Counterparties’) — a process that has now continued in earnest post-petition with outreach to 83 Potential Counterparties in the aggregate. These Potential Counterparties are made up of domestic and international strategic cryptocurrency related businesses and private equity and other investment firms that currently have crypto-related investments and/or historical experience investing in the cryptocurrency industry.
By July 21, 2022, over 37 of the Potential Counterparties have entered into confidentiality agreements with the Debtors. Parties who executed a confidentiality agreement received a copy of the Debtors’ investor presentation and access to a virtual data room containing thousands of pages of information regarding the Debtors’ business operations finances, and material contracts. In addition, parties that signed confidentiality agreements were offered the opportunity to participate in telephone conferences with the Debtors’ management team as well as to request additional due diligence information.
Intent on moving expeditiously through the chapter 11 process and to generate positive momentum, the Debtors filed the Joint Plan of Reorganization of Voyager Digital Holdings, Inc. and its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code [Docket No. 17] on the first day of these cases. To ensure the Debtors are maximizing value, the standalone Plan complements the Debtors’ ongoing marketing efforts by setting a floor against which potential Transactions will be measured.
In furtherance of this goal, the Debtors seek to establish formal Bidding Procedures to set the guidelines for a potential Transaction. The Transaction will either be consummated through: (a) a Plan; or (b) a Sale of all or substantially all of the Debtors’ Assets. The Debtors believe that the Bidding Procedures will best facilitate a potential Auction, thereby garnering the best recovery available for all stakeholders. The Bidding Procedures provide for substantial flexibility with respect to the structure of any Transaction and allow the Debtors to select a Stalking Horse Bidder and provide Bid Protections on the terms described in the Bidding Procedures if the Debtors believe, in an exercise of their business judgement, that doing so will generate the best Transaction for their estates….
Approval of the Bidding Procedures at the second day hearing in these chapter 11 cases, along with the proposed Sale Schedule, will provide the Debtors with the most optionality to move expeditiously through these chapter 11 cases should one of the many interested purchasers come forward with a viable indication of interest. To maximize the competitiveness of any bidding process, the Debtors also seek authority to (a) select one or more bidders to act as a stalking horse bidder (each, a ‘Stalking Horse Bidder’), and (b) in connection with any Stalking Horse Bidder and related agreement, provide customary bid protections in an amount no greater than three percent of the purchase price contemplated by any stalking horse agreement with a Stalking Horse Bidder (the ‘Bid Protections’) to the extent the Debtors determine that provision of such Bid Protections would be an actual and necessary cost of preserving the value of the Debtors’ estates”.
Key Sale Dates:
- Bid Deadline: August 26, 2022
- Auction Date: August 29, 2022
- Sale Objection Deadline: September 6, 2022
- Sale Hearing: September 8, 2022
Other Key Dates:
The bidding procedures as adopted also include the following key dates:
- Deadline to file Disclosure Statement: August 12, 2022
- Disclosure Statement Objection Deadline: September 9, 2022
- Disclosure Statement Hearing: September 16, 2022
- Plan Objection and Plan Voting Deadlines: October 24, 2022
- Confirmation Hearing: October 31, 2022
About the Debtors
According to the Debtors: “Voyager Digital Ltd. is a fast-growing, publicly traded cryptocurrency platform in the United States founded in 2018 to bring choice, transparency, and cost efficiency to the marketplace. Voyager offers a secure way to trade over 100 different crypto assets using its easy-to-use mobile application, and earn rewards up to 12 percent annually on more than 40 cryptocurrencies. Through its subsidiary Coinify ApS, Voyager provides crypto payment solutions for both consumers and merchants around the globe.”
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