Court Withhold Decision on Babel Finance’s Moratorium Extension Request

Babel Finance’s request for a moratorium extension has been withheld by Singapore high court.

The beleaguered cryptocurrency exchange which became bankrupt following the collapse of the TerraLUNA protocol asked for an extension for its creditors’ protection as the initial scheduled date draws closer. According to Singapore High Court, it needs more time to scrutinize the proposed restructuring plan and the objection raised by one of Babel’s creditors.

The new restructuring plan involves refunding creditors from the income generated by “Babel Recovery Coins”, a new decentralized finance (DeFi) project minting system.

At the same time, Deribit, a leading Bitcoin and Ether derivatives exchange for options and futures trading who is also a creditor to Babel Finance, requested that global professional services firm, Alvarez & Marsal be appointed as the independent advisor to oversee the entire restructuring process.

The Bankruptcy Fall of Babel Finance

Babel Finance suspended withdrawal on its platform in June 2022 when the bear market was hitting hard. The crypto exchange cited “unusual liquidity pressures” as the reason behind the decision to halt outflows.

After several attempts to solve its liquidity problems including seeking support from investors and shareholders, the Hong Kong-based crypto lending platform decided to hire the United States investment banking firm Houlihan Lokey to oversee its restructuring process.

In the long run, Babel has also involved other global legal advisers like Kirkland & Ellis, Allen & Gledhill, and Carey Olsen.

Based on the drafted restructuring plan, affected creditors were scheduled to receive a refund by August 2022 but currently, the protocol is hoping to complete the repayment process before the end of the first half of 2023. 

On March 6th, the embattled crypto lender filed for moratorium protection under section 64 of the Insolvency, Restructuring and Dissolution Act (Act No 40 of 2018, Singapore) on 6 March 2023. The moratorium protection filing was “intended to allow the restructuring efforts made by Babel Finance in the past few months to come to fruition.” 

The current moratorium is due to expire by April 5th, only a few days away. However, an interim moratorium has been granted till April 17th which is the next court hearing. So far, it has been gathered that Babel Finance owes its creditors up to $750 million.