The moratorium approved on Monday, according to Vauld parent company Defi Payments Ltd, will provide it the time to develop a restructuring strategy.
The troubled cryptocurrency lending platform Vauld has been given a brief reprieve from creditors after the Singapore High Court on Monday granted it a three-month moratorium.
According to a Bloomberg article, Justice Aedit Abdullah allegedly rejected Vauld’s parent business Defi Payment Limited’s original request for a six-month moratorium on Monday, expressing fears that a longer moratorium “won’t obtain enough oversight and monitoring.”
The moratorium would shield Defi Payments from potential legal actions, such as those brought by its 147,000 creditors, wind-up resolutions, the appointment of a receiver or manager, and any other potential legal actions.
The moratorium, according to Vauld’s amended website FAQ on Monday, would provide the company the breathing room to develop a restructuring plan for the company and improve the situation 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.”
Without a moratorium, Vauld warned, it would be “very conceivable” that creditors would only receive a portion of the value of their account.
Judge Abdullah says he will give an extension if Vauld is open about their progress in paying off creditors even if the current protection order’s expiration date is Nov. 7.
Additionally, the cryptocurrency platform has been granted two weeks to set up a creditors committee and inform creditors of its cash flow and asset assessment.
The high court judge also suggested looking into the potential of minimum withdrawals for their remaining clients.
Plan to restructure
Withdrawals from Vauld’s 800,000 customers were stopped last month due to poor market circumstances and an unprecedented $200 million in withdrawals in only two weeks.
Vauld aims to create a restructuring strategy and research opportunities to resurrect the company while the moratorium is in effect.
The company intends to provide creditors with a thorough Explanatory Statement containing an estimate of recoveries and repayment arrangements that will be made available to creditors as part of its restructuring proposal.
There is no specific date as of yet for Defi Payments to call a meeting of creditors and conduct a vote on whether to approve any potential restructuring.
Nexo’s purchase offer
Darshan Bathija, a co-founder of Vauld, tweeted on July 5 that cryptocurrency lender Nexo had signed an indicative term sheet with a view to potentially 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 gives Nexo an exclusive 60-day exploring period to research Vauld activities before deciding to make a purchase.
According to Vauld’s website FAQ, the sale can be disrupted if the order of protection expires before the end of the exploratory period.
Vauld will have 60 days to complete discussions before being free to speak with further potential investors.