Creditors have approved the rescue plan of Australian company Digital Surge, preventing the crypto platform from going out of business.
Reports noted that founders Josh Lehman and Daniel Rutter proposed the plan. It will let customers and unsecured creditors receive 55 cents for every Australian dollar of their previous claims.
Digital Surge Had FTX Connections
The FTX collapse affected many businesses, including the Queensland-based platform. Last week, AFR reported that before FTX’s implosion in November 2022, one employee withdrew over $1.6 million from the troubled Australian broker. After the collapse, Digital Surge prevented its 30,000 customers from accessing their money by freezing their trading accounts. In addition, the exchange instituted voluntary administration in December.
Although the platform was in immediate danger of going bankrupt, a long-term plan from the creditors will keep it operating for the time being. News outlets reported that at a creditor meeting on Jan. 24, they approved the deed of company arrangement (DOCA). The vote allowed Digital Surge to carry on business and satisfy its creditors’ claims.
The KordaMentha Restructuring administrators approved the DOCA put out by the founders. Lehman and Rutter have reportedly contributed $1 million of their own funds to the proposal.
Allowing Fiat Payments to Customers
According to Administrator David Johnstone, this course of action is preferable to promptly winding up Digital Surge. Customers and unsecured trade creditors will be able to access the payable funds over the next few months, according to a statement from KordaMentha.
It noted, “Customers will be repaid in cryptocurrency and fiat currency, depending on the asset composition of their individual claims.”
However, the value of cryptocurrencies will determine the amount repaid to creditors on the day of reimbursement. As per the statement, if cryptocurrency values increase on repayment day, the percentage return will be higher. It is based on the value of creditors’ claims on December 8, 2022, when the company entered voluntary administration.
‘A distribution of the balance of customer claims will be paid on a pari passu (at the same rate) basis over the next five years out of the quarterly net profits of Digital Surge,’ the group added.
Disclaimer
BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.
Source: https://beincrypto.com/australian-crypto-exchange-digital-surge-pulls-out-bankruptcy-ftx-blow/