Crypto Lender Vauld Gains 3 Month Immunity To Creditors
2022.08.02 15:25
Crypto Lender Vauld Gains 3 Month Immunity To Creditors
The moratorium approved on Monday, August 1st, by the Singapore High Court will provide Vauld’s parent company Defi Payments Ltd with 3-month protection from creditors. Company representatives claim that the time will be used to develop a strategy for restructuring.
The Needed Time to Restructure
The moratorium will shield Defi Payments from wind-up resolutions, the designation of a receiver or manager, and any legal action that may otherwise have be taken against the business, including those related to its 147,000 creditors.
The moratorium, according to Vauld’s amended FAQ section, will provide the company with the necessary breathing room to develop a restructuring plan, and to improve the situation for its creditors. Vauld warned that without the relaxed measure, it is “highly likely” that creditors would only have received a portion of the value of their accounts.
Vauld aims to develop a restructuring strategy and research opportunities to resurrect the company over the duration of the moratorium.
The company intends to provide creditors with a thorough explanatory statement that will provide an estimate for the recovery and repayment arrangements that will be made available to creditors as following the rebuild proposal.
Not the 6 Months Targeted
Justice Aedit Abdullah reportedly rejected the initial request by Vauld’s parent company Defi Payment Limited for a six-month moratorium due to concerns that an extended moratorium would not be subject the company to enough oversight and monitoring.
Judge Abdullah stated that an extension may be granted on the condition that Vauld is open about its progress in paying off creditors, though the protection order’s expiration date currently stands at November 7th.
The cryptocurrency platform was further granted two weeks to set up a creditors committee which would provide creditors with a cash flow and asset assessment.
Unfavorable Market Conditions
The recent crypto crash heavily eroded the progress of the crypto industry, as cryptocurrency financial platforms like Celsius, BlockFi, and Voyager Digital announced the suspension of trading, deposits, and withdrawals, sparking concern and outright panic investors and ultimately leading to massive sell offs.
Vauld joined the list of such protocols last month when it elected to prevent the platform’s 800,000 customers from undertaking withdrawal operations, citing unfavorable market conditions and the unprecedented $200 million worth of withdrawals that were made in the span of two weeks.
On the Flipside
Vauld Co-Founder Darshan Bathija revealed on Twitter (NYSE:TWTR), on July 5th, that cryptocurrency lender Nexo was considering the possibility of acquiring Vauld and its assets. According to Vauld’s website FAQ, the sale could be disrupted if the order of protection expires before the end of the exploratory period.
Why You Should Care
Following the crypto crash, between $1 billion and $5 billion worth of investor funds were locked up on struggling centralized finance platforms.
Find out more about the potential acquisition of Vauld:
Crack the Vauld: Nexo Offers to Buy Out Struggling Crypto Platform
For more on Celsius’ bankruptcy protection claim, check out:
Celsius Network Files for Bankruptcy Protection, Leading to a 50% Loss for CEL
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