Vauld has until Feb 28 to avoid liquidation

abdelaziz Fathi

The Singapore High Court has granted the troubled crypto lender Vauld an additional one-month protection from creditors to come up with a revival plan. It will effectively shield the company from any potential litigation from creditors, avoid a cease of operations and liquidation of assets until February 28.

The move gives the company breathing room as it seeks to sell itself after getting bids from two crypto asset fund managers to take over management of the tokens stuck on its platform.

As reported by Bloomberg, the court was satisfied by Vauld’s claim that the negotiations have entered to the “advanced stage.” However, the company said in an affidavit that it needs until April 21 to close the deal.

Vauld-parent company, Defi Payments, was granted a three-month protection from creditors back in August 2022. The first moratorium, which is similar in concept to Chapter 11 bankruptcy under the US bankruptcy code, is set to expire on January 20. At the time, the majority of Vauld creditors voted to support the moratorium, though 7% were against it.

Vauld owes $402 million to creditors, of which, $363 million belongs to individual retail investors. Earlier this month, the company confirmed the termination of ongoing negotiations surrounding the long running purchase offer by rival Nexo.

Nexo’s plans to acquire the troubled platform have fallen apart after nearly six months of deliberations as it reached the “enough is enough” point. The lender has already introduced a series of amendments to its original bid, but Vauld rejected the final proposal for the deal calling it “would not be in the best interests of its debtors.”

The acquisition plan has been already in hot water for a while since Vauld founder and CEO Darshan Bathija told the media that the takeover had been canceled. However, Nexo denied reports suggesting that it was scrapping plans to acquire its beleaguered rival.

Earlier in June, both lenders signed off a term sheet giving them two months of exclusive talks to explore an all-equity acquisition of the Singapore-based business.

Vauld has been thrown a lifeline from Nexo, which is based in London, after it had suspended withdrawals for its more than 800,000 customers. At the time, the crypto lender backed by Coinbase and Silicon Valley billionaire Peter Thiel said it was exploring restructuring options due to “financial challenges” posed by a sharp plunge in cryptocurrencies.

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