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Zipmex seeks extension for bankruptcy protection in Singapore Zipmex seeks extension for bankruptcy protection in Singapore

Zipmex seeks extension for bankruptcy protection in Singapore

Zipmex exchange at the brink of a collapse turns to the Singapore High court for bankruptcy protection as it looks to raise more funds to continue operation.

Zipmex seeks extension for bankruptcy protection in Singapore

Cover art/illustration via CryptoSlate

Struggling crypto exchange Zipmex has filed for a moratorium in Singapore to extend its protection against legal actions from aggrieved creditors.

The application comes barely one week after the exchange halted withdrawals from its platform due to a liquidity crunch. Zipmexโ€™s solicitor Morgan Lewis Stanford has requested a court order that prevents creditors from suing the company for six months.

According to Zipmex, the moratorium will enable the team to focus all of its efforts on resolving the liquidity issues affecting its operations.ย 

Subsidiaries of the Zipmex group covered in the application are Zipmex Asia Pte Ltd, Zipmex Pte Ltd, Zipmex Company Limited (incorporated in Thailand), Zipmex Exchange Indonesia, and Zipmex Australia Pty Ltd.

Moratorium in Singapore

Under Singapore law, a company facing a liquidity crisis can file for a moratorium which automatically gives it 30-day protection against legal proceedings from creditors. This is to enable the company to explore options of settling its creditors or filing for an extension of the moratorium. If the company needs more time, the presiding court will schedule a hearing with concerned creditors to decide on extending the moratorium or not.

In the case of Zipmex, the hearing will take place on July 29. If the court grants its request, it will use the six months period to explore all available options to pay its creditors amicably.

A similar case is ongoing for Singapore-based crypto lender, Vauld. The platform halted client withdrawals on July 4 and owes its customers $363 million. As its liquidity crisis worsened, it applied to the Singapore High court for a six-month moratorium. The hearing is scheduled for August. However, the firmย in an advanced stage discussion for a potential acquisition by crypto lending company, Nexo.

Zipmexโ€™s survival plan

The exchangeโ€™s financial crisis is closely linked to the collapse of Babel Finance and Celsius. It has a $53 million exposure to the two crypto firms, which defaulted on the loans due to declining market conditions. Zipmex is seeking to pursue recovery of the $48 million loan from Babel Finance, as it writes off the $5 million owed by Celsius.

Zipmex is working on creating a restructuring plan and securing more investments to secure its operations. It confirmed in an announcement that it has received a large amount of capital to inject into the platform as it signed off the second memorandum of understanding (MOU) on July 27.

The exchange stated that with the initial deposit coming from an interested investor, it will proceed to discuss final terms and hopefully deploy the funds to continue its operation.