Have you heard that cryptocurrency exchange Voyager has filed for Chapter 11 bankruptcy? Did you invest in using the platform after watching commercials featuring Mark Cuban? Did you go to take your money out and realize that you may have been scammed?
What the case, Voyager's exchange and markets are without enough liquidity to cover their debts, and they filed for bankruptcy in July 2022. So now, it's time to consider your options if you had money invested with their platform. In this blog post, I'll outline how you can try to get your money back from them.
What to Know about Voyager and Bankruptcy:
The first thing to know is that Voyager has filed "Chapter 11" Bankruptcy as of November 17th, 2022. That means they are officially seen as the "debtor" by the Bankruptcy Court, aka the party that owes debts. If Voyager owes you money, that makes you a possible "creditor."
Named after the U.S. bankruptcy code 11, corporations generally file Chapter 11 if they are insolvent and require time to restructure their debts. This version of bankruptcy gives the debtor a fresh start. However, the terms are subject to the debtor's fulfilling obligations under the reorganization plan. During a Chapter 11 proceeding, the court will help a business restructure its debts and obligations. In most cases, the firm remains open and operating. Many large U.S. companies file for Chapter 11 bankruptcy and stay afloat. Such businesses include automobile giant General Motors, the airline United Airlines, retail outlet K-mart, and thousands of other corporations of all sizes.
The biggest advantage for Voyager is that the business can continue operations through the reorganization process. This allows them to generate cash flow that can aid in the repayment process.
But how do you get involved with the repayment process? Well, the first step is to file a "Proof of Claim."
What is a Proof of Claim?
Proof of claim is an essential element in the bankruptcy process. It documents your right as a creditor to repayment from the debtor. The proof of claim describes the type of claim, priority status, and the amount of the outstanding debt.
The debtor's chapter 11 bankruptcy filing may significantly impact a creditor and can jeopardize its ability to handle its financial responsibilities. Filing a chapter 11 bankruptcy proof of claim can affect whether, how, and when you receive repayment from a debtor.
Chapter 11 creditors technically do not need to file a proof of claim if the debtor has accurately described the nature and amount of the debt owned in its schedules and has not designated the debt as disputed.
But even though you are not technically required to file a proof of claim, it can be helpful. For example, the proof of claim will supersede the information regarding the claim that the debtor listed in their schedule of assets and liabilities. Additionally, if you do not file a proof of claim form, the bankruptcy court will accept the information the debtor listed. Filing your form allows you to dispute any inaccuracies in the debtor's schedules such as:
- The category of debt
- The amount listed
- The creditor is not listed
- The claim is designated as disputed, unliquidated, or contingent
Also, if you do not receive notice from the court, it could mean that Voyager has overlooked its financial obligation to you. But don't worry. You still have a legal path to recompense through a "Proof of Claim."
What Information Do I Need?
The following is a list of the important details a creditor will need to have ready to complete a Proof of Claim form in a bankruptcy case:
- Debtor's Information: Debtor's Name and the relevant Bankruptcy Case Number
- Creditor's Information: Name of contact person, contact information (including phone, email, and mailing address)
- Classification Section of the Claim: select either Secured, General Unsecured, or Priority Unsecured
- The amount owed as of the Petition Date
- Basis of the claim: with documents provided to support the claim such as invoices of goods or services purchased, delivery receipts, contracts, loan or credit card balance, legal settlements, etc)
- Attach documentation that shows an itemization of charges to demonstrate the claim amount owed
- Signature of the Creditor or an Authorized Representative
How to File a Proof of Claim:
- Identify the Case - The first thing you will want to do is find out where the debtor has filed for bankruptcy and the case number of their filed case. This information will help attach your claim to the appropriate bankruptcy filing. Voyager Chapter 11 filing case number is available on the state of Vermont's website.
- Download the Form - The Administrative Office of the U.S. Courts provides the form for free online.
- Review the Instructions - the court lists out the steps needed to complete your proof of claim. It's useful to take 10 minutes and review them.
- Fill the Form Out - This can be done on your digital device, or by hand, but fill out the form's questions to the best of your ability. Be prepared to sign the document.
- Attach Copies of Any Supporting Documents - You will not want to give up the original copies of any supporting documents with your filing in case they are lost or damaged. Instead, the court asks that you attach redacted copies of any documents that show that the debt exists, a lien secures the debt or both.
- File it with the Appropriate Court - As the creditor, you must file the form with the clerk of the same bankruptcy court in which the bankruptcy case was filed. In this case, Voyager filed in the United States Bankruptcy Court for the state of Vermont.
You have several options to submit your filing.
- Submit your Proof of Claim by Mail - The state of Vermont Bankruptcy Court accepts mail at: Department of Financial Regulation Consumer Services, 89 Main Street, Montpelier, VT 05620
- Submit an Electronic Proof of Claim - The court provides a website you can file the claim through.
Of course, if you want assistance, you can always generate and file your claim with Dispute in 5 minutes from your phone or computer.
When Do I Need to File My Proof of Claim?
The last possible date that creditors are allowed to file their Proof of Claim against a Debtor in a bankruptcy case is known as the Bar Date. This is effectively the deadline for creditors to adhere to the bankruptcy claims timeframe through timely submissions of Proof of Claim to be accepted by the court.
A creditor may receive a "Notice of the Bar Date" in their formal notice of bankruptcy filing issued by the bankruptcy court. This same notice will include the Proof of Claim form and instructions for how to fill it out and submit it properly. You can also call the court and request the bar date information from the local clerk.
Proof of Claim forms that are filed after the bar date are usually rejected and not given any consideration by the court. For this reason, it is advisable to file a Proof of Claim well before the bar date so as not to risk the court's consideration of the validity of the Proof of Claim.
As of the writing of this article, a bar date had not been set for the Voyager bankruptcy.
What Happens After I File?
Once you have successfully filed a Proof of Claim, you can confirm that it was received by the bankruptcy court by enclosing a stamped self-addressed envelope and a copy of the completed form, and the court will return a stamped confirmation to you in the mail.
Alternatively, you can visit the website of the bankruptcy court's PACER system to review the submission. For Proofs of Claims that were filed electronically, an online confirmation will be provided as a receipt.
What happens next is, unfortunately, not so simple, and the legal proceedings of a Chapter 11 bankruptcy case can take many steps before a Plan of Reorganization is approved and claim payouts are ultimately distributed. You may want to consult with an attorney for advice.
But, by submitting a valid Proof of Claim to the court, you can rest assured your bankruptcy claim is accurately represented in the case, and that you have a legal right of recourse against Voyager.
Other Frequently Asked Questions:
What kind of bankruptcy proof of claim am I filing?
There are four types of claims:
- Secured Claim - a secured claim is debt supported by collateral or a lien on a specific property of the debtor. The classification of secured claims is given priority in the bankruptcy claims process, meaning they have the right to be paid from the available funds or bankruptcy estate before other creditor classes are paid out.
- Unsecured Claim - is, by definition, one that does not meet the requirements of a secured claim. Simply put, unsecured claims are debts not guaranteed by collateral or a lien on the debtor's assets.
- Priority Claim - debt entitled to special treatment in the bankruptcy claims process and will get paid ahead of unsecured non-priority claims. A debtor must pay out a priority claim in full and with cash under the Chapter 11 Plan unless a creditor agrees to different terms.
- Examples include:
- employee compensation
- unpaid contributions to employee benefits plans
- tax obligations owed to the government
- pending personal injury or workplace injury or death claims
- certain deposits are given to the creditor to secure future goods or services
- alimony and child support
- the costs of administering the bankruptcy case (e.g. professional accounting and legal fees)
- Non-Priority Claim - If an unsecured claim does not fall under any of the categories above, then it may be considered a non-priority.
What happens if I miss the Bar Date?
If you miss the bar date, you must convince the bankruptcy court that there is a legitimate reason for filing late and missing the bankruptcy claims timeframe. It is possible to request that the Debtor (Voyager) file the Proof of Claim on your behalf. However, in this case, it is up to the creditor to show your reasoning to the court.
Under extenuating circumstances, a creditor can also file a late Proof of Claim and have it accepted by the court. However, the strict criteria and subsequent dealings with the court to excuse the failure to meet the bar date can make it challenging.
If you have any additional questions about filing a bankruptcy Proof of Claim against Voyager, please don't hesitate to reach out.