The court scheduled an emergency hearing for Voyager Digital’s Chapter 11 filing on Tuesday, and Judge Michael Wiles asked the company to show a legitimate need in its interim motions. Yesterday’s hearing addressed the more crucial concern, whether the firm could honor its Brex corporate card payments.
On July 6, Voyager Digital filed for a chapter 11 bankruptcy in the U.S. Bankruptcy Court of the Southern District of New York. The filing allows the firms to run operations with the restructuring plans to pay back their creditors.
However, it is not always possible for Voyager Digital to implement a new court-ordered business plan. Now, the court will hear arguments regarding interim motions granting relief for specific purposes, especially those business that covers the right to pay an expense.
Voyager Digital’s next hearing has been scheduled for August 4, which will decide whether Voyager is permitted to withdraw funds from the Benefit of Customers (FBO) account at Metropolitan Commercial Bank to honor customer withdrawals.
Reportedly, Voyager Digital has made the expense of $300,000 a month on company cards. Earlier filing with the court stated that the firm used five corporate cards. However, the latest info from the council revealed that there were 24 cards which were used for the transactions.
This includes 9 physical cards, 14 virtual cards, and a single card used for travel. Combining these all cards made an expense of $76,000, which is a way smaller sum in comparison to the bankruptcy proceedings.
After making payment on the first day with cards, Brex warned Voyager that it would detain the corporate cards owing to non-payment. Although, it promised to restore the cards if the balance paid out.
Christine Okike of Kirkland & Ellis, a counsel for Voyager, made arguments that they required access to these cards to pay their critical vendors.
However, Judge Wiles threw out this argument and rebuked the firm that it had failed to assess other options to pay critical vendors or open other lines of credit.
But, the Office of the US Trustee hasn’t raised any issue regarding the request given on how small the sum is in the scheme of the proceedings.
By considering this, Wiles approved the motion with terms. According to the current situation, motions for relief are granted to prevent immediate and irreparable harm. In the future, he is expecting a greater demonstration of need.
