Court grants Zipmex’s rescue financing super-priority status

SINGAPORE’S High Court on Friday (Dec 23) granted Zipmex’s white knight super-priority claims on assets over existing creditors, for a US$5.85 million lifeline to keep the crypto exchange going as it restructures.

Singapore-headquartered Zipmex is in distress following a US$48 million exposure to troubled crypto lender Babel Finance, which forced Zipmex to halt user withdrawals in July.

With the rescue financing, the crypto platform is aiming to resume customers’ access to crypto assets in early April, its lawyer said on Friday.

Zipmex’s new investor was undisclosed. Bloomberg earlier reported V Ventures, a subsidiary of one of Thailand’s largest investment firms Thoresen Thai Agencies, is nearing a deal possibly worth US$100 million in cash and crypto for 90 per cent of the business.

In its application to the High Court, Zipmex sought for the undisclosed investor’s US$5.85 million loan to be secured by charges over shares owned by Zipmex.

These shares represent the company’s ownership of Zipmex Thailand and Zipmex Exchange Indonesia. Financial adviser KordaMentha had valued these entities at US$6 million at the lower end.

Zipmex has about US$700,000 in cash in its bank balance. Without the financing, the company will survive till January, said Zipmex’s lawyer Jonathan Tang from Morgan Lewis Stamford.

A liquidation scenario prepared by KordaMentha estimates a 13 to 29.74 per cent return on each debt. The process is expected to be drawn out, given the difficulties in liquidating crypto assets and crypto subsidiaries.

The US$5.85 million financing will be disbursed in tranches up till February. The first tranche comprises US$1.54 million, of which US$1.1 million will be used to increase the capitalisation of Zipmex Indonesia to comply with expected regulations.

The second tranche of US$1.8 million comprises US$1 million that will be used to return a deposit paid by a potential lender. The remaining money in the first two tranches will be used for working capital.

The third and fourth tranches, of US$1.25 million each, will be used for working capital. Zipmex estimates its burn rate at around US$1.2 million per month from December.

The company recently came under fire after Thailand’s Securities and Exchange Commission said a privacy agreement sent to customers was “unclear and unfair”. The commission warned customers to carefully review the agreements before making a deal with Zipmex, the Bangkok Post reported.

A customer, Nawita Direkwut, who appeared during Friday’s hearing, told the court: “The settlement agreement in English is very straightforward. But the settlement agreement that was translated to Thai is totally unfair and biased.”

Direkwut added: “It requires client-customers to surrender the rights and privileges to take any legal actions against Zipmex prior to any cryptocurrencies being transferred back to their accounts. And that has been a very major concern to all the clients here in Thailand.”

Justice Aedit Abdullah requested the Thai version of the agreement for review. He asked Zipmex for an update by Jan 6 on its communications with customers.

Justice Aedit added that concerns raised by customers need to be addressed, or they may be factored into his deliberations for the approval for the grant of the scheme of arrangement.