Defi Payments gets 3-month extension on moratorium as creditors call for withdrawals
Benjamin Cher
DEFI Payments, a unit of crypto lender Vauld, has been granted a 3-month extension on its moratorium to Nov 7 by Justice Aedit Abdullah, as it seeks to consider crypto lender Nexo’s buyout offer. Defi Payments is also an applicant for a Singapore digital payment token licence.
The crypto platform has about 147,000 creditors from across the globe, owing a total of US$402 million. Its creditors are based worldwide, with creditors in the United States, the United Kingdom and India appearing during the Zoom hearing to express their support for the application and comments about Vauld’s operations.
In its application to the courts, Defi Payments had stated that the main reason for its current difficulties was the result of the collapse of the cryptocurrency market in recent times and a large number of customers requesting withdrawals.
Defi also claims that it has the support of some of its creditors for a moratorium extension.
Of the 147,000 or so creditors, 2,910 responded to a questionnaire, of which 2,280 or about 78.3 per cent were in support of the extension, while 442 or 15.2 per cent did not take a position on the matter.
The remaining 188 or 6.5 per cent objected to the moratorium extension.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
A number of crypto platforms have filed for bankruptcy protection in recent months, the most recent being crypto exchange Zipmex, which filed for bankruptcy protection in Singapore on Friday (Jul 26).
Others, like crypto lender Voyager Digital, applied for Chapter 11 bankruptcy, which pauses all civil litigation and allows for companies to operate and prepare a turnaround plan. Voyager Digital estimates it has over 100,000 creditors and has between US$1 billion and US$10 billion in assets and corresponding liabilities worth the same value.
Crypto Lender Celcius was also another platform filing for bankruptcy, after pausing withdrawals and transfers between accounts in June.
According to Defi Payments’ counsel, Sheila Ng from Rajah and Tann, 12 of the top 20 creditors, representing US$86 million or 21 per cent of the total owed, supported the extension of the moratorium. The remaining 8 did not object to the extension.
Defi Payments had originally requested for a 6-month extension, based on the due diligence checks and negotiations needed for the tentative offer by Nexo. The offer includes an acquisition of Vauld, capital raising, and a scheme of arrangement.
A debt repayment plan or conversion is also under discussion with Nexo.
While the creditors present at the hearing voiced their support for the extension via messages in chat or orally via video, a number called for the allowing of withdrawals from Vauld, citing financial difficulties. Creditor Brian Murray had voiced support for the moratorium, but also requested that Vauld process transactions prior to the shutdown.
Another creditor from Croatia also supported the extension and noted that even if the Nexo deal falls through, Vauld would have other buyers waiting in the wings.
Another creditor, Stephen Song, also noted that the Nexo deal comes with terms and conditions that will not support customers from restricted jurisdictions such as the US, which could impact customers and creditors from those countries.
A number of creditors also called for an establishment of a creditors’ committee.
In granting the moratorium extension, Justice Aedit said he wanted to see updates on establishing a creditors’ committee and a mechanism for allowing withdrawal.
Defi Payments has been given 4 weeks to look at the logistics and process in appointing a creditors’ committee to build a framework to submit to the courts.
The crypto lender also has to report to the courts and creditors its cash-flow projections and valuation of assets in 2 weeks, and its management accounts in 8 weeks.
Justice Aedit also granted Defi the ability to apply for a further 3-month extension to the moratorium should creditor support and feasibility to turn around the business remain.
Copyright SPH Media. All rights reserved.
