Nexo Vauld Acquisiton Deal Off As $274m Hole In Balance Sheet, What Creditor Options Are Available?

2 min read

Nexo Vauld Acquisiton Deal Off As $274m Hole In Balance Sheet, What Creditor Options Are Available?

Nexo has completed due diligence on Vauld and will not acquire it as things stand at the moment, Vauld stated in their latest release.

Here are the Minutes of Meeting of Committee of Creditors(CoC)

Vauld’s CEO Darshan Bathija explains to the CoC that Nexo says the USD81 million gap is too high for them. He then elaborates, explaining that Nexo will only acquire Vauld if they close their balance sheet hole to $40 million.

It is presumed that this has been the case for quite some time since the underlying hasn’t changed, so one wonders what Vauld has been up to during the last three months.

In his motion, Vauld wants more time from the court to put together a vote from creditors. That apparently will take four more months according to them. Surely, Darshan’s fat monthly check has nothing to do with it.

Vauld argues there are only three options for creditors:

Vauld can offer three options for creditors, and creditors will determine the outcome. Vauld cannot force creditors to do anything, unless it is via obfuscation, outright lies, or manipulation of the ignorant.

  1. Option 1: With a reverse auction, Vauld convinces at least $80m of creditors to accept $40m or less (it could be more like $100m, Vauld won’t say). This option honestly doesn’t look bad for either side. The Perhaps, Nexo deal may then move forward with an 18 million+ lockup to follow. Kroll uses much more careful language than Darshan, and says a minimum of 18 months lockup is required. In other words, if Nexo can’t make more money by holding your money, then you aren’t getting your money back yet.
  2. Option 2: Vauld puts what funds they have under the management of a “recognizable crypto asset manager.” The fund would attempt to get back to par within 3 years. A 25% withdrawal would be permitted after each year, or a total withdrawal at the end of the third year.
  3. Option 3: Vauld liquidates. According to Vault, there could be a 62% loss on assets and it would take three years to recover.

I think that it would be in Vauld’s best interest to make option 3 look as poor as possible for the creditors (and to make the reverse auction more lucrative). It would remove all control from the CEOs, and I doubt any CEO like public failure and loss of control of all assets.

Where is the money? Apparently not with Vauld.

It is also interesting to note how ridiculous Vauld seems to have been in allocating their capital. As if it were done to tie up loose ends.

  • Vauld has a $142 million loan maturing in June ’23 to an unnamed counterparty. What is the purpose of this loan? Is it for a subsidiary company of Vauld? Is it to the CEOs themselves? Neither the loan party nor the terms of the loan are being divulged. What is the interest rate on this loan? Is this loan secured in any way?
  • Vauld put $27m in to loan out despite knowing that CoinLoan has a maximum withdrawal of $15k/day (meaning 5 years to withdraw their $27 million again). Is CoinLoan going to be around in 5 years? It doesn’t seem likely.
  • The Indian government also seized $24.6 million as part of its investigation into Flipvolt.

Vauld may very well have siphoned off an additional $197m in funds, which might prove impossible to recoup over time. There is no guarantee that CoinLoan will never go bankrupt or experience problems. A five-year withdrawal timeline is either criminal on Vauld’s part or an outright lie. A loan without an explanation of terms or counterparty smacks of self-dealing to me. Who knows when the Indian government will return those $24.6m. Could Vauld’s balance sheet hole actually amount to $274 million? So far, it appears so.

A judge should investigate this, or put this company in receivership so that a court official who has customers best interests at heart can efficiently free up capital.

Via this site


Chris Munch

Chris Munch is a professional cryptocurrency and blockchain writer with a background in software businesses, and has been involved in marketing within the cryptocurrency space. With a passion for innovation, Chris brings a unique and insightful perspective to the world of crypto and blockchain. Chris has a deep understanding of the economic, psychological, marketing and financial forces that drive the crypto market, and has made a number of accurate calls of major shifts in market trends. He is constantly researching and studying the latest trends and technologies, ensuring that he is always up-to-date on the latest developments in the industry. Chris’ writing is characterized by his ability to explain complex concepts in a clear and concise manner, making it accessible to a wide audience of readers.

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