On Monday, the Singapore High Court granted a three-month moratorium to an embattled crypto lending platform, giving it a brief reprieve from creditors.
According to Bloomberg, Justice Aedit Abdullah denied Vauld's parent company Defi Payment Limited's initial request for a six-month moratorium on August 1, expressing concern that a longer moratorium "will not get adequate supervision and monitoring."
The moratorium would protect Defi Payments from winding-up resolutions, the appointment of a receiver or manager, and any legal proceedings aimed toward the company, including any laid out by its 147,000 creditors.
Vauld claimed in an updated FAQ on its website on Monday that the moratorium would give the company the breathing room it needed to develop a restructuring plan and provide a better outcome for its creditors.
"The moratorium is an important procedure to give the company the breathing room it needs to formulate and carefully consider its options."
Without a moratorium, creditors would be "highly likely" to receive only a fraction of their account's value, according to the lending company.
While the new protection order is set to expire on November 7, Judge Abdullah has stated that if it is transparent about their progress in repaying creditors, he will grant an extension.
The cryptocurrency platform has also been given two weeks to form a creditors committee and provide creditors with information on cash flow and asset valuation.
The high court judge also suggested that they investigate the possibility of minimum withdrawals for their remaining customers.
Plan for restructuring
Vauld suspended customer withdrawals for its 800,000 customers last month, citing unfavorable market conditions and an unprecedented $200 million in withdrawals in less than two weeks.
Under the protection of the moratorium, the company hopes to develop a restructuring proposal and investigate options for reviving the business.
The company intends to present a restructuring proposal to creditors in the form of a detailed Explanatory Statement outlining an estimate of recoveries and repayment plans that will be made available to creditors.
Defi Payments intends to call a creditors' meeting and hold a vote on whether to approve any potential restructuring; however, no date has been set.
Nexo’s offer to buy
Darshan Bathija, the co-founder of Vauld, announced on Twitter on July 5 that crypto lender Nexo had signed an indicative term sheet to potentially acquire Vauld and its assets.
"The transaction is subject to due diligence, which both teams are currently working on. It has strived to deliver long-term value to all customers, and we believe coming under the Nexo umbrella will significantly help us achieve this."
Before committing to a purchase, the term sheet grants Nexo a 60-day exclusive exploratory period to conduct due diligence on operations.
If the order of protection expires before the end of the exploratory period, Vauld claims in their website FAQ that the deal may be jeopardized.
Vauld will be free to negotiate with other potential investors after the 60-day period expires.