The Singapore Supreme Court granted bankruptcy protection to cryptocurrency exchange company Zipmex on Monday. The court said it would allow the company to continue operating until December 2.
A judge of the court, Aedit Abdullah, said that the company could apply for another extension of the moratorium if it makes further requests.
On July 22, Zipmex applied for bankruptcy protection due to the financial problems caused by the global cryptocurrency crash. Two of its lenders, Celsius Network and Babel Finance, had also experienced liquidity issues.
Bankruptcy protection allows a company to continue its operations and avoid legal proceedings. It also gives it the freedom to implement its restructuring plans.
Zipmex's embattled lenders
The Singapore-based company provides a cryptocurrency trading platform. Zipmex charges its users a fee for each trade. It also provides loans to other exchanges. The company has subsidiaries in countries including Indonesia, Thailand, and Australia. One of these is by charging
Jonathan Tang, an attorney for Zipmex, said during a court hearing on Monday that the company had provided loans to two of its embattled lenders. On July 22, Zipmex said its lenders owed the company almost $66 million. As of July 21, the company had a net balance of only $5 million.
"Our loan to Celsius Network was minimal and we intend to write off this loss against our own balance sheet," Zipmex said on its website.
The court heard that since June, Zipmex had regularly communicated with its lender, Babel Finance, to discuss liquidity issues. According to the company, the latter might face liquidity problems due to the cryptocurrency crash.
During a meeting on July 20, the company revealed it was considering restructuring its debt with Babel Finance, which led to the filing of bankruptcy protection on July 22.
On July 20, the company temporarily stopped payouts from various products, such as its Z and Trade wallets. It then resumed these features on July 22.
What's ahead
During the hearing, the company said it had not received any objection letters opposing its bankruptcy protection application. It also received messages from its creditors, who expressed their support for the company's decision to file for bankruptcy protection.
During the hearing, Judge Aedit addressed the attorneys of the company and its creditors, who were present via Zoom. He said that he was still focused on the merits of the company's petition for bankruptcy protection. The judge also could not rule on the validity of the claims filed by its creditors.
Judge Aedit said that the company's lay creditors might not be able to properly oppose the motion due to the limited number of documents they could provide. He then directed the company to establish procedures allowing its various entities to receive support and objection letters from its customers.
Although the judge granted the company's request for a moratorium on its operations until December 2, he also ordered the company to hold town hall meetings to address its creditors' concerns. Judge Aedit also ordered the company to provide the court with copies of the meetings' minutes.