October 12, 2022 – The Ad Hoc Group of Equity Holders*of Voyager Digital Ltd. (the “Debtor” or “TopCo”) has objected to the Debtors’ Disclosure Statement [Docket No. 524] arguing that "in the money" equity interests in the Debtors' holding company (see structure chart below) are part of a "sham' whereby the topCo is stripped of its assets in favor of Voyager's Account Holders.  The AHG argues has TopCo equity claims are in fact "equal in priority to the claims of Account Holders" and as such should be sharing an asset pool, including "$230 million in intercompany claims that TopCo holds against OpCo [ie, Voyager Digital, LLC]." The Disclosure Statement, the AHG continues, provides ample disclosure on the treatment of the Account Holders but falls suddenly quiet as to TopCpo equity claims; providing only that "such claims will receive 0%." Turning to the Restructuring Transactions Memorandum (according to the AHG, not included with the Disclosure Statement but otherwise frequently referred to), the AHG adds: "Shockingly the Restructuring Transactions Memorandum could simply provide that TopCo’s $230 million of intercompany claims are worthless, without any justification or explanation for such treatment.”

* The "AHG's" financial advisor (Matthew Dundon of Dundon Advisers LLC) provides as to composition of his client: "I understand the AHG to consist of numerous holders of common stock of Voyager Digital Ltd. ('TopCo') and the lead plaintiff in a lawsuit filed in Canada on behalf of a class of TopCo common stockholders."

The AHG Objection

The objection notes, “TopCo Interests are ‘in the money,’ based upon publicly available information disclosed in these Chapter 11 Cases. Yet, the Debtor’s Disclosure Statement provides no mention of the potential value that could and should be available for Holders of TopCo Interests. Worse yet, the Plan is structured to allow for the elimination of any such value. The Plan is designed, based upon the Debtors’ own admissions, for the benefit of Account Holders resulting in prejudice to the detriment of TopCo Interests….the Plan strips TopCo of its assets, and the Disclosure Statement fails to explain this sham.

The Plan does not provide for substantive consolidation of TopCo with the other Debtors. And the Disclosure Statement reveals that the sole material obligation of TopCo is being negated, leaving TopCo with no significant obligations. That sole material obligation is TopCo’s guaranty of the Alameda Loan, which loan obligation is being cancelled through the Plan thereby eliminating TopCo’s guaranty obligation and leaving TopCo without any material liabilities.

On the other hand, TopCo has significant and valuable assets. TopCo holds over $230 million of intercompany claims against OpCo. TopCo owns equity interests in its nondebtor subsidiaries. TopCo holds significant direct and derivative claims against its directors and officers. TopCo’s assets are easily worth hundreds of millions of dollars. Yet the Disclosure Statement either fails to explain why this value is not being made available to the TopCo Interest Holders or discloses Plan provisions that will impermissibly result in the elimination of such value to the detriment of the TopCo Interest Holders.

The over $230 million in intercompany claims that TopCo holds against OpCo are equal in priority to the claims of Account Holders. Both the intercompany claims and the claims of Account Holders are general unsecured claims. The treatment for Account Holders’ claims is discussed in detail in the Disclosure Statement. The treatment for TopCo’s intercompany claims is not, other than to say such claims will receive 0%. The Debtors propose a multitude of possible outcomes for TopCo’s intercompany claims, all in accordance with a ‘Restructuring Transactions Memorandum’ that is not included in the Disclosure Statement. TopCo Interest Holders have no role in negotiating the Restructuring Transactions Memorandum. Shockingly the Restructuring Transactions Memorandum could simply provide that TopCo’s $230 million of intercompany claims are worthless, without any justification or explanation for such treatment.”

Corporate Structure

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