Singapore-based Vauld will get some breathing space after the country’s High Court granted its parent company creditor protection for the next three months. The move comes as the struggling crypto lending platform seeks acquisition by rival Nexo.
Vauld will have 3 months for the restructuring and due diligence of Nexo
The Singapore High Court has granted crypto lender Vauld’s parent company, Defi Payments Ltd., three months of creditor protection, Bloomberg reported, noting that this would allow Vauld to restructure and prepare for a possible acquisition by its competitor Nexo, a major player. in the crypto lending market.
Judge Aedit Abdullah approved a moratorium until November 7 during a court hearing on Monday. During this period, Vauld’s 147,000 creditors will be barred from taking legal action against her. He had asked for an additional three months, but the judge expressed concern that a six-month protection would not provide “adequate supervision and control”.
Nevertheless, the moratorium can be extended, based on an assessment of the company’s engagement with creditors, he stressed. His progress in this regard will be taken into account at the next hearing. Abdullah asked the company to form a creditors’ committee to settle outstanding issues in the meantime.
The cryptocurrency lender is also expected to provide details, including cash flow and asset valuation, to its creditors in two weeks and regarding the management of its accounts in eight weeks, the judge added.
A series of failures in the crypto lending industry will likely prompt further regulatory scrutiny, the report notes. Companies like digital travelBabelFinance, and Celsius Network have been affected by the downturn in the crypto market this year. The central bank of Singapore has already indicated that it is considering introducing more safeguards for consumers in the crypto space.
Nexo optimistic about a possible acquisition of Vauld
Shortly after reassuring clients about the health of his business in mid-June, Vauld began laying off employees. On July 4, he announced suspension of withdrawals and entered into talks with Nexo seeking to sell itself to its competitor.
Both sign an indicative term sheet granting Nexo a 60-day exploratory period for a possible acquisition. According to correspondence to creditors sent by CEO Darshan Bhatija on July 11, Vauld had $330 million in assets and $400 million in liabilities at the group level.
Nexo co-founder and managing partner Antoni Trenchev told Bloomberg that the lender remains bullish on the deal while noting that it will take time to “understand the liabilities, the receivables, who the counterparties are, what are the prospects of obtaining these claims” and all other aspects in order to make a decision on the matter.
A lawyer representing Defi Payments, Sheila Ng, said the company will allow a minimum withdrawal for its creditors, given the court ruling. This decision will affect Vauld users with cryptocurrency balances in their accounts, institutional lenders who have lent funds to Defi Payments, and vendors.
Do you think three months will be enough for Vauld to restructure and finalize a deal with Nexo? Share your expectations in the comments section below.
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