Singapore-based Vauld will have some breathing space after
the country’s High Court gave its parent company creditor protection for
the next three months. The decision comes as the troubled crypto
lending platform seeks acquisition by rival Nexo.
Vauld to Have 3 Months for Restructuring, Due Diligence by Nexo
The Singapore High Court has granted the parent company of crypto
lender Vauld, Defi Payments Ltd., a three-month protection from
creditors, Bloomberg reported, noting this would allow Vauld to
restructure and prepare for a potential acquisition by competitor Nexo, a
major player in the crypto lending market.
Justice Aedit Abdullah approved a moratorium until Nov. 7 during a
court hearing on Monday. During said period, Vauld’s 147,000 creditors
will be barred from taking legal action against it. It had asked for
three more months but the judge expressed concerns that that a six-month
protection would not ensure “adequate supervision and monitoring.”
Nevertheless, the moratorium can be extended, based on assessment of
the firm’s engagement with the creditors, he pointed out. Its progress
in that respect will be taken into account during the next hearing.
Abdullah asked the firm to form a creditors committee to address the
outstanding issues in the meantime.
The cryptocurrency lender is also expected to provide details,
including on cash flow and valuation of assets, to its creditors in two
weeks’ time and regarding the management of its accounts in eight weeks,
the judge added.
A series of failures in the crypto lending sector will likely lead to
greater regulatory scrutiny, the report remarks. Companies like Voyager Digital, Babel Finance, and Celsius Network
were hit by the crypto market downturn this year. Singapore’s central
bank has already indicated it is mulling the introduction of more
consumer safeguards in the crypto space.
Nexo Optimistic About Possible Vauld Acquisition
Soon after reassuring customers about the health of its business in
mid-June, Vauld started laying off employees. On July 4, it announced suspension of withdrawals and started talks with Nexo seeking to sell itself to its competitor.
The two signed
an indicative term sheet granting Nexo a 60-day exploratory period for a
possible acquisition. According to correspondence to creditors sent by
CEO Darshan Bhatija on July 11, Vauld had $330 million in assets and
$400 million in liabilities at the group level.
Nexo’s co-founder and Managing Partner Antoni Trenchev told Bloomberg
the lender remains optimistic about the transaction while also noting
it will take time to “to understand the liabilities, the receivables,
who the counterparties are, what are the prospects of getting those
receivables” and all other aspects in order to make a decision on the
matter.
A lawyer representing Defi Payments, Sheila Ng, said that the company
will allow a minimum withdrawal for its creditors, given the court’s
decision. The move will concern Vauld users with cryptocurrency balances
in their accounts, institutional lenders that have lent funds to Defi
Payments, and vendors.
source link : https://news.bitcoin.com/singapore-high-court-grants-crypto-lender-vauld-temporary-protection-from-creditors/
