Customers and unsecured trade creditors of Brisbane-based cryptocurrency platform Digital Surge will receive 55 cents to every Australian dollar of their claims made on 8 December, after creditors assented to a rescue package put forward by founders Josh Lehman and Daniel Rutter.
A creditor meeting vote today turned out in favour of a deed of company arrangement (DOCA) that will allow Digital Surge to continue to trade and resolve the claims of its creditors.
The DOCA proposed by the founders, who had also put forward $1 million of their own money, was recommended by administrators John Mouawad, David Johnstone and Scott Langdon of KordaMentha Restructuring.
Administrator David Johnstone said the DOCA was in the creditors’ best interests and provided a superior return and more certainty, compared to Digital Surge being immediately wound up and placed into liquidation.
In a statement, KordaMentha said customers and unsecured trade creditors would be able to access the amount to be payed on the Digital Surge platform within the next few months.
"Customers will be repaid in cryptocurrency and fiat currency, depending on the asset composition of their individual claims," KordaMentha said.
"The exact value of this amount will depend on the value of the total pool of cryptocurrencies on the date creditors are repaid. This means if cryptocurrency prices rise, there will be a greater percentage return as compared to creditors’ claims at 8 December 2022, the date the company entered voluntary administration.
"A distribution of the balance of customer claims will be paid on a pari passu (every creditor on an equal footing) basis over the next five years out of the quarterly net profits of Digital Surge."
KordaMentha added a creditors' trust would be created to facilitate the distribution of these payments to unsecured creditors.
"These payments will be made in fiat currency only. The administrators will be appointed trustees of the creditors’ trust to oversee the orderly distribution of trust funds to creditor beneficiaries," the group said.
Established in 2017, Digital Surge has 30,000 Australian customers on its books to whom it has offered more than 300 cryptocurrencies through its technology platform.
Deposits and withdrawals have been suspended since the decision was made to appoint KordaMentha as administrators on 7 December 2022 to protect the interests of customers and creditors.
"There’s no denying this has been an extremely difficult and upsetting time for everyone in the cryptocurrency sector. We have always operated with our users’ best interests at heart, including the decision to enter this process," Digital Surge co-founder and CEO Daniel Rutter said at the time.
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