Crypto Lender Vauld granted 3-month protection from Singapore court against creditors
Singapore’s High Court has granted ailing crypto-lending firm Vauld a three-month moratorium to continue exploring options on how to repay its creditors.
The latest legal action by the court allows them to enjoy a three-month moratorium preventing creditors from starting or continuing legal proceedings. Vauld has now bought some time until November 7 to explore the options. Meanwhile, the court has asked Vauld’s creditors to form a committee.
After letters of demand from some creditors, the judge has granted the deadline for Vauld to explore withdrawal mechanisms for creditors in distress.
The crypto lending company owes more than $400 million to its creditors, 90% of which came from individual investor deposits.
The lender is currently carrying out due diligence in a probing period while the legal proceedings take place in the background.
All creditors will receive updated financial details of the Peter Thiel-backed cryptocurrency lender in another eight weeks, the court said Monday in a virtual hearing.
The three-month extension means disgruntled creditors of Vauld cannot start or continue any legal proceedings against the firm while it examines restructuring options.
Vauld’s operations remain suspended while client funds are frozen until the firm reaches a restructuring deal, including the potential acquisition of rival London-based crypto lender Nexo.
Vauld had sought a six-month moratorium period from the court to prepare the planned restructuring of the firm and possible acquisition of Nexo.
What went wrong with crypto lending firms
On July 5, Singapore-based crypto lender Vauld suspended all withdrawals, trading and deposits on its platform – an unfortunate event triggered by the downturn in crypto markets.
Therefore, the firm announced plans to explore potential restructuring options to navigate the challenges it is experiencing.
A few days later, on July 8, Vauld filed for bankruptcy protection in a Singapore court to give itself “the breathing space” required to prepare for the planned restructuring.
It is the latest company to be caught up in the current chaos gripping the crypto world. The recent market crash adversely affected the operations of several lending firms, including Vauld, Three Arrows Capital, Celsius Network, Voyager Digital and BlockFi, among others.
The problematic situations have forced some companies to file for bankruptcy while others are looking for urgent capital injections.
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