Vauld gets yet another creditor protection extension until April 28 

Troubled Asian crypto lender Vauld received a further extension to its legal protection from creditors at a Singapore High Court hearing on Monday as it continues to work on restructuring.

The company now has until April 28 to explore options to ease its financial troubles, the fifth time the deadline has been pushed back, two sources with direct knowledge of the matter told The Block. By April 14, Vauld needs to finalize a restructuring proposal and apply to the court to convene a meeting of creditors, the sources said. Vauld’s previous creditor protection expired on March 24. 

Vauld halted client withdrawals last July amid a broader crypto market downturn that followed the implosion of TerraUSD, the stablecoin often known as UST. Vauld had staked around $28 million in UST, as The Block reported at the time. The firm had also taken long positions in cryptocurrencies such as bitcoin, ether, matic and XRP.

Vauld had been in discussions with rival Nexo for a potential acquisition as part of its restructuring plan, but those talks ended after a dramatic tussle. The company’s current restructuring plan is a “managed wind down” (MWD) as it will provide “faster and better returns” to creditors, Vauld said in its latest affidavit dated March 21, obtained by The Block. 

“The current estimate for the MWD to be completed within three years is a suitable balance for creditors to receive their payouts as well as for Defi Payments to recover its illiquid assets,” the affidavit reads. DeFi Payments is the name of Vauld’s Singapore entity that is involved in court proceedings.

It remains to be seen whether Vauld is able to get its MWD program approved by creditors. If not, the company could go into liquidation — a process that can take over a decade to settle. Vauld owes over $325 million to creditors and its financial hole stands at over $65 million.

‘Business restart’ plan 

Vauld also has a new “business restart” plan in mind, with a plan to “pivot to a DeFi yield generation model for new customers who will inject new money.”

“Returns on these yield generation strategies will be used to pay new customers their contractual share and net profits will be used to improve recoveries to scheme creditors over the course of the proposed restructuring,” the affidavit reads. “This proposed business restart will be run under the existing cost base forecast for the scheme, and scheme creditors will retain oversight and control of costs incurred via the scheme creditor proposed to be appointed to the board of directors. “

This business restart will be implemented by “new management,” per the affidavit. Vauld’s co-founders Darshan Bathija and Sanju Sony Kurian will “resign from their management positions upon scheme implementation,” according to an email Vauld sent to its creditors last week and obtained by The Block. 

“Participation in DeFi yield generation will be open to existing creditors, but not mandatory — if you opt to stay out, your claims will not be affected, and you will receive the net profit benefit to scheme creditors. If you choose to participate, you will have the choice to inject new money or use restructuring distributions to earn yield while simultaneously receiving recoveries under the scheme,” the email reads.

Vauld and its financial advisor, Kroll, did not immediately respond to requests for comment.

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