Battered Crypto Lender Vauld Granted 3-Month Creditor Protection
The crypto lender, backed by Peter Thiel and Coinbase, was given a moratorium by Justice Aedit Abdullah that will last until November 7. The move will help provide some respite to Vauld, whose 147,000 creditors will be prohibited from taking legal action against it. As per the court hearing on Monday, the company had asked for more time.
Vauld paused operations and revealed exploring restructuring options as a result of the “financial challenges” posed by a sharp plunge in cryptocurrencies. Currently, the Singapore-based company has $330 million in assets and $400 million in liabilities at the group level.
A Breathing Room
The judge reportedly asserted that an extension of the said period could be possible upon assessing Vauld’s progress in engaging with its creditors. As such, the company has been asked to set up a creditor’s committee to deal with the issue. Vauld will now have to furnish information with regards to cash flow and valuation of assets to its creditors in two weeks and management of its accounts in eight weeks.
“I am concerned a six-month moratorium won’t get adequate supervision and monitoring.”
The judge will note the progress in the next hearing. The decision comes almost a month after Vauld filed for a moratorium against its creditors in the Singapore High Court, citing that it would restructure its debt and consider a buyout deal from its rival, Nexo. It also sought an extension on the moratorium for six months.
Unraveling of Vauld
Vauld secured $25 million in Series A funding last summer. The funding round was participated by Valar Ventures, the venture-capital firm founded by Peter Thiel, Andrew McCormack, and James Fitzgerald, and also Pantera Capital and Coinbase Ventures. But as the price of cryptocurrencies battered, several prominent crypto lenders felt the beating exposing flaws and inconsistencies in their business models.
Vauld halted withdrawals earlier last month. The company laid off 30% of its workforce in a move to cut costs, slashed its marketing budget, and even trimmed its executive compensation.
Last week, the lender revealed facing hostile action from several creditors. As per an affidavit filed by the co-founder and CEO, Darshan Bathija, Vauld received two demand letters as well as two civil claims from four of its creditors.
