Crypto lender Vauld granted reprieve from creditors

Published On: August 2, 2022Categories: Alternative Investments1.8 min read

The moratorium is an important procedure to provide the company with the breathing room necessary for it to formulate and consider its options carefully, it said

Embattled crypto lending platform Vauld has been granted a short period of reprieve from creditors after being given a three-month moratorium by the Singapore High Court on Monday.

Its initial request by Vauld’s parent company Defi Payment Limited for a six-month moratorium was reportedly denied by Justice Aedit Abdullah on Monday, citing concerns that a lengthier moratorium ‘won’t get adequate supervision and monitoring,’ according to a Bloomberg report.

Under the moratorium, Defi Payments would be protected from wind-up resolutions, the appointment of a receiver or manager and any legal proceedings that could be directed toward the company, including any that could be laid out by its 147,000 creditors.

Vauld claimed in its updated website FAQ on Monday that the moratorium would provide the breathing room necessary to come up with a restructuring plan for the business and provide a better outcome 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, it said.

Vauld noted that without a moratorium, it would be ‘highly likely’ that creditors would only receive a fraction of their account’s worth.

While the new protection order expires on Nov. 7, Judge Abdullah says he will grant an extension if Vauld is transparent about their progress in repaying creditors.

The crypto platform has also been given two weeks to form a creditors committee and provide details around cash flow and valuation of assets to creditors.

Exploring the possibility of minimum withdrawals for their remaining customers has also been recommended by the high court judge.

Vauld halted customer withdrawals last month for its 800,000 customers, citing unfavourable market conditions and an unprecedented $200 million worth of withdrawals in less than two weeks.

Under the protection of the moratorium, Vauld hopes to formulate a restructuring proposal and explore options to revive the business.

The company plans to present creditors with a restructuring proposal in the form of a detailed Explanatory Statement outlining an estimate of recoveries and repayment plans that will be made available to creditors.

Eventually, Defi Payments plans to convene a creditors’ meeting and hold a vote on whether to approve any possible restructuring; however, there is no set date yet.

About the Author: Jonathan Adams

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