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Voyager Digital disclosure statement draws U.S. trustee objection
By Sarah Lizee
Olympia, Wash., Oct. 14 – Voyager Digital Ltd.’s disclosure statement for its Chapter 11 plan drew an objection from Region 2 U.S. trustee William K. Harrington, according to court documents filed with the U.S. Bankruptcy Court for the Southern District of New York.
Harrington said the disclosure statement shouldn’t be approved because it fails to provide creditors with enough information to allow them to make an informed choice as to whether to approve or reject the plan.
“The disclosure statement fails to state that the plan it supports is a liquidating plan – even though the plan is premised on the sale of substantially all the debtors’ assets,” the U.S. trustee said.
“Thus, the disclosure statement should make clear that, if the plan is, in fact, a liquidating plan, there is to be no discharge under section 1141(d) of the bankruptcy code.”
Harrington also took issue with the third-party releases in the plan.
“Although the plan, as amended, now allows parties-in-interest to opt into the third-party releases, neither the plan nor the disclosure statement explain why such releases are warranted,” the U.S. trustee said.
Harrington also noted that the debtors’ chief executive officer is set to receive special protection under the plan. The CEO is the beneficiary of an injunctive provision that effectively shields him and his assets from third-party claims.
“Parties-in-interest can neither opt into or out of this provision. They should be afforded the opportunity to weigh in on this provision, which appears to function as a nonconsensual release,” the U.S. trustee added.
Voyager Digital is a cryptocurrency broker based in New York. The company filed bankruptcy on July 5 under Chapter 11 case number 22-10945.
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