Vauld's parent company Defi Payments Ltd says the moratorium granted on
Monday will give it the necessary breathing room to form a
restructuring plan.
Embattled crypto lending platform Vauld has been granted a short
period of reprieve from creditors after being given a three-month
moratorium by the Singapore High Court on Monday.
Its initial request
by Vauld's parent company Defi Payment Limited for a six-month
moratorium was reportedly denied by Justice Aedit Abdullah on August 1,
citing concerns that a lengthier moratorium "won't get adequate
supervision and monitoring," according to a Bloomberg report.
Under
the moratorium, Defi Payments would be protected from wind-up
resolutions, the appointment of a receiver or manager, and any legal
proceedings that could be directed toward the company, including any
that could be laid out by its 147,000 creditors.
Vauld claimed in its updated
website FAQ on Monday that the moratorium would provide the breathing
room necessary to come up with a restructuring plan for the business and
provide a better outcome for its creditors.
"The
moratorium is an important procedure to provide the company with the
breathing room necessary for it to formulate and consider its options
carefully."
Vauld noted that without a moratorium, it
would be "highly likely" that creditors would only receive a fraction of
their account's worth.
While the new protection order expires on
November 7, Judge Abdullah says he will grant an extension if Vauld is
transparent about their progress in repaying creditors.
The
crypto platform has also been given two weeks to form a creditors
committee and provide details around cash flow and valuation of assets
to creditors.
Exploring the possibility of minimum withdrawals
for their remaining customers has also been recommended by the high
court judge.
Restructure plan
Vauld halted customer withdrawals
last month for its 800,000 customers, citing unfavorable market
conditions and an unprecedented $200 million worth of withdrawals in
under two weeks.
Under the protection of the moratorium, Vauld
hopes to formulate a restructuring proposal and explore options to
revive the business.
The company plans to present creditors with a
restructuring proposal in the form of a detailed Explanatory Statement
outlining an estimate of recoveries and repayment plans that will be
made available to creditors.
Eventually, Defi Payments plans to
convene a creditors’ meeting and hold a vote on whether to approve any
possible restructuring; however, there is no set date yet.
Nexo’s offer to buy
On July 5, Vauld Co-founder Darshan Bathija announced on Twitter that crypto lender Nexo had signed an indicative term sheet, with the intention of possibly acquiring Vauld and its assets.
"The
completion of this transaction is pending due diligence — which both
teams are working on as we speak. Vauld has strived to deliver long-term
value to all customers, and we believe coming under the Nexo umbrella
will significantly help achieve this."
The term sheet
grants Nexo a 60-day exclusive exploratory period to conduct due
diligence on Vauld operations before committing to a purchase.
If
the order of protection expires before the end of the exploratory
period, Vauld claims in their website FAQ it could possibly disrupt the
deal.
After the end of the 60-day period, Vauld will be free to conduct negotiations with other possible investors.
source link : https://cointelegraph.com/news/crypto-lender-vauld-granted-three-month-protection-from-creditors
