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. This decision is made as Nexo, a rival crypto-lending platform, seeks to acquire Vauld.
Vauld to Receive 3 Months of Restructuring and Due Diligence from Nexo
Bloomberg reported that the Singapore High Court granted Vauld’s parent, Defi Payments Ltd., a protection against creditors for three months. This would enable Vauld to restructure its business and be ready for Nexo’s potential acquisition. Nexo is a key player in crypto lending.
Justice Aedit Abdullah approved the moratorium through Nov. 7 at a hearing in court 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. The next hearing will take into consideration the firm’s achievements in this regard. Abdullah requested that the company form a creditors’ committee in order to resolve the remaining issues.
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.
The report states that a series of crypto lending industry failures will lead to increased regulatory scrutiny. The crypto market crash this year has affected companies like Voyager Digital and Babel Finance as well as Celsius Network. Singapore’s central bank has already indicated it is mulling the introduction of more consumer safeguards in the crypto space.
Nexo Optimistic Regarding Possible Vauld Acquisition
Vauld soon laid off its employees, shortly after it reassured customers regarding the company’s business health in mid-June. Vauld announced suspensions of withdrawals, and initiated talks with Nexo in order to buy itself from its rival.
They signed an indicative terms sheet, which granted Nexo a period of 60 days to explore the possibility of acquiring Nexo. Darshan Bhatija, CEO of Nexo, sent correspondence to creditors on July 11 that stated Vauld owned $330 million in assets while the group had $400 million in liabilities.
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. This will affect Vauld users who have cryptocurrency balances and institutional lenders who have lent money to Defi Payments.
Are you sure that Vauld will have enough time to complete a Nexo deal and restructure the company in three months? Please share your thoughts in the comment section.
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