SUMMARY
As part of this protection, Singapore-based Vauld’s 1,47,000 creditors will be barred from taking legal action against it
While the company asked for a six-month extension, the judge observed that a six-month moratorium would not get adequate supervision and monitoring
The company has been given a time of two weeks for providing details of cash flow and valuation of assets to its creditors
Asset-backed crypto lending platform Vauld has been granted a three-month protection from creditors. Justice Aedit Abdullah of Singapore High Court granted Vauld’s parent DeFi Payments Pte Ltd a moratorium that would last till November 7.
As part of this protection, Singapore-based Vauld’s 1,47,000 creditors will be barred from taking legal action against it, Bloomberg reported.
While the platform asked for a six-month extension, the judge observed that a six-month moratorium would not get adequate supervision and monitoring. However, he added that the company may be allowed an extension later based on its progress in engaging with its creditors.
Moreover, the platform has been given a time of two weeks for providing details of cash flow and valuation of assets to its creditors, and eight weeks for the management of its accounts.
This comes at a time that the company is in talks with London-based crypto lending platform Nexo for its acquisition. Sheila Ng, the lawyer appearing for Defi Payments, said the company needed six months for restructuring, due diligence by Nexo, along with reconciliation of the group company accounts.
Additionally, she also assured that the company will consider the court’s suggestion in regards to allowing minimum withdrawal for its creditors. The creditors include both Vauld users with cryptocurrency balances in their accounts and institutional lenders that lent funds to Defi Payments and vendors.
Although Vauld is registered in Singapore, it was being operated and managed from India. In early July, it announced suspension of its operations. It wrote in a blog post that the current market climate led to significant customer withdrawals.
“We are currently in discussions with potential investors in the Vauld group of companies. We intend to apply to the Singapore courts for a moratorium – a suspension of the commencement or continuation of any proceedings against the relevant companies so as to give us breathing space to carry out the proposed restructuring exercise,” Vauld cofounder and CEO Darshan Bathijasaid in the blog post.
Later in an email, Bathija informed investors the company had applied to a Singapore court for a moratorium. He also mentioned that moratorium would provide breathing space to prepare for a business restructuring to safeguard the interests of all stakeholders.
The ongoing Russia-Ukraine war, rising inflation and tightening monetary policies have made investors risk averse. This also affected cryptocurrencies, with major digital currencies seeing their price crash over the last few months.
Vauld is not the only crypto startup to see the impact of crypto winter. Three Arrows Capital, a prominent crypto hedge fund based in Singapore, and New Jersey-based crypto asset management firms Voyager Digital and Celsius have also filed for bankruptcy under different chapters.
While the moratorium will give breathing space to Vauld and help in its potential acquisition by Nexo, it remains to be seen if the ongoing crypto crisis also affects other crypto startups.
