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United States Bankruptcy Court for the Southern District of New York
August 5, 2022, Decided
Chapter 11, Case No. 22-10943 (MEW) (Jointly Administered)
DECISION AS TO MOTION TO PERMIT WITHDRAWALS BY CUSTOMERS OF FUNDS HELD IN FBO ACCOUNTS AT METROPOLITAN COMMERCIAL BANK
Voyager Digital Holdings, Inc. and its affiliated debtors and debtors-in-possession in these cases (the "Debtors") have filed a motion seeking, among other things, to permit customers to withdraw funds from two "for the benefit of" (or "FBO") accounts held at Metropolitan Commercial Bank ("MC Bank"). The Debtors argued, among other things, that the funds that are actually on deposit in the FBO accounts belong directly to Voyager's customers and are not property of the Debtors' bankruptcy estates. The Official Committee of Unsecured Creditors (the "Committee"), and MC Bank, have filed papers in support of this request for relief, and no party in interest has opposed [*2] the relief. During a hearing on the motion held on August 4, 2022 (the "Hearing"), the Committee and MC Bank concurred with the Debtors' contentions that the funds in the relevant bank accounts belong to customers and are not property of the estates.
The Customer Agreement that governs the Debtors' relationships with customers, as updated through January 7, 2022, was submitted as an attachment to the Debtors' motion. [ECF No. 73.] The Customer Agreement has different provisions regarding the manner in which cash and cryptocurrency will be held. With respect to cash, paragraph 5(A) of the Customer Agreement states that customers may deposit cash that will be held in an omnibus account at MC Bank. More particularly, it states:
Cash deposited into the Customer's Account is maintained in an omnibus account at Metropolitan Commercial Bank (the "Bank"), which is a member of the Federal Deposit Insurance Corporation ("FDIC"). Voyager maintains an agreement with the Bank whereby the Bank provides all services associated with the movement of and holding of USD in connection with the provision of each account. Therefore, each Customer is a customer of the Bank. All U.S. regulatory obligations [*3] associated with the movement of, and holding of, USD in connection with each Account are the responsibility of the Bank. For purposes of clarity, any services pertaining to the movement of, and holding of, USD are not provided by Voyager or its Affiliates. Cash in the Account is insured up to $250,000 per depositor by the FDIC in the event the Bank fails if specific insurance deposit requirements are met.
See Customer Agreement, ¶ 5(A).
Full case includes Shepard's, Headnotes, Legal Analytics from Lex Machina, and more.
2022 Bankr. LEXIS 2178 *; 2022 WL 3146796
In re: VOYAGER DIGITAL HOLDINGS, INC. et al., Debtors.
Customer, Cryptocurrency, funds, cases, insolvency proceedings, rights, deposit