By
Andy Watson
November 15th, 2023
In an updated version of its FAQs, the company explains the cause of its financial problems which includes general market volatility and the effects of its business partners’ own financial problems.
Crypto lender Vauld’s parent company, DeFi Payments Pte Ltd has been granted three-month protection from creditors by the Singapore High Court. The moratorium, granted on Monday, protects the company from potential lawsuits as it formulates a restructuring plan. 4 days after announcing that it was facing financial challenges and would need to conduct the restructuring of the Vauld business, on July 8, DeFi Payments applied for permission to enter a “scheme of arrangement” – a court-supervised process to restructure its liabilities.
This automatically activated a month-long moratorium that protected the company from legal action by creditors. The application for a six-month moratorium was denied by the court citing the potential for inadequate monitoring and supervision of the process.
Justice Aedit Abdullah on Monday, however, extended the initial moratorium by three months. This gives the company up to 7 November 2022 to restructure while being protected from legal action by its 147,000 creditors. In addition, the company was instructed to form a creditor’s committee to engage with its creditors and provide cash flow and asset valuation information in two weeks and data on its account management in two months.
“The court was happy to grant us further extensions as long as we proactively communicate about the progress made on the transaction to the court and the 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,” the company comments on the ruling.
Financial Position of Vauld, Its Restructuring Plan and a Potential Nexo Buyout
In an updated version of its FAQs, the company explains the cause of its financial problems which includes general market volatility, the effects of its business partners’ own financial problems and liquidity resulting from mass withdrawals by clients in June following Celsius’ announcement that it was pausing withdrawals. Withdrawals averaged $1-8 million per day with a peak net withdrawal of about $56 million on June 13.
The Vauld Group also reveals that it was affected both directly and indirectly by the Terra (UST) collapse. The company had an estimated $28 million stake in UST. the subsequent decline of the crypto market also affected its company’s assets as it had taken long positions in Bitcoin, Ether and others to the tune of approximately $37 million.
Early last month, digital assets institution Nexo expressed interest in acquiring Vauld and signed an indicative term sheet for a 60-day exclusive exploratory period. Nexo co-founder and Managing Partner Antoni Trenchev emphasized that the company remains optimistic about the deal. He however added, “But we have to understand the liabilities, the receivables, who the counterparties are, what are the prospects of getting those receivables and, you know, all things like that in order to be in a position in order to make a decision. And it takes time.”