Troubled crypto lender Vauld has been granted three-month protection from creditors by the High Court of Singapore.
The moratorium granted to Vauld-parent company Defi Payments Ltd. by Justice Aedit Abdullah would last until November 7, according to a court hearing. It will effectively shield the company from any potential litigation from creditors during that period.
At the hearing, the judge requested that the company form a creditors committee in order to address the necessary issues. In two weeks, Vauld is expected to provide details like cash flow and valuation of assets to its creditors, while management of its accounts is expected in eight.
Although the period only represents half of the six months initially requested, the judge added that an extension may be possible. “I am concerned a six-month moratorium won’t get adequate supervision and monitoring,” he said. This would ultimately depend on an assessment of the firm’s progress in engaging with its creditors, which will be assessed at the next hearing.
While the moratorium will provide some breathing room for the company to complete its acquisition by Nexo, Defi Payments attorney Sheila Ng said the firm would need six months. She said this would be the minimum amount of time necessary for restructuring, due diligence by Nexo, and reconciliation of the group company accounts.
Similar to other crypto lenders earlier this year, such as Voyager Digital Ltd., Babel Finance, and Celsius Network Ltd., earlier this year, Vault experienced a sudden reversal of fortunes. On June 16, the Singapore-based company was reassuring customers about the health of its business. However, layoffs soon followed within five days. Shortly thereafter, in early July, Vauld suspended withdrawals, trading, and deposits on its platforms and then proceeded to announce discussions with Nexo.
In an email to creditors on July 11, Chief Executive Officer Darshan Bhatija said Vauld has $330 million in assets and $400 million in liabilities at the group level. Last year, the company raised $25 million in a Series A round led by Peter Thiel’s Valar Ventures.