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A court hearing held in Singapore on Monday revealed that frozen assets of Thai users on the troubled platform held in its Z Wallet and ZipUp+ products will remain locked until Zipmex reforms its business.
Jonathan Tang, senior associate at Morgan Lewis Stamford, which is representing Zipmex in the city-state to protect the company from bankruptcy, made this clear during the session.
“The general sentiment of the Thai users who have signed up to ZipUp+ Singapore is that they want their assets in the Z Wallet to be unfrozen so that they can deal with it,” Tang noted in court, which was conducted virtually.
The lawyer had sought a moratorium period of five months to allow Zipmex to reach a restructuring deal. Presiding Justice Aedit Abdullah granted a roughly three-month reprieve till Dec 2 instead, with the possibility of a further extension.
Tang explained that the company has received three concrete investment proposals to reform itself, with each investor wanting to pump capital into Zipmex in exchange for a stake. Two of those proposals included two tranches of US$2.5 million to be injected into the company, the lawyer said.
“The restructuring plan is this: Once the investment is complete, the company, or rather the group, will resume withdrawals on the Z Wallet, such that business will continue as usual for all customers,” he said.
Zipmex filed for bankruptcy protection in Singapore on July 22 after having more than US$50 million in exposure to Celsius Network and Babel Finance – crypto lenders that have taken hits from the recent plunge in cryptocurrency prices.
Some 200,000 customers of its Thai business had deposited fiat and digital currency through the ZipUp+ service, which the Singapore unit then invested into Celsius and Babel.
“When a Zipmex Thailand customer chooses to place its crypto asset in the ZipUp+ programme under Zipmex Singapore, they then enter into a new set of terms and conditions with Zipmex Singapore that grant ownership of the crypto asset to Zipmex Singapore,” Tang said.
The platform’s troubles surfaced last month in Thailand when it suspended trading and baht withdrawals. The company had paused operations, citing market volatility and liquidity problems faced by its Singapore unit.
It was the first admission by an Asian company of exposure to US-based Celsius, which has filed for bankruptcy, and Hong Kong-based Babel, which is restructuring after halting withdrawals.
In court on Monday, Tang said Zipmex received 60 objections to a proposed moratorium, primarily from Thailand-based creditors with added claims totalling US$1.1 million.
On the other hand, support for the restructuring process amounted to claims worth US$6.5 million, the lawyer said in presenting the case for the company to be given time to work out a deal.
In granting the moratorium, Justice Abdullah directed Zipmex to hold a meeting for its Thailand-based creditors, where the Singapore legal proceedings should be explained, in addition to the status of potential restructuring deals. Tang proposed for the meeting to be held in a month.
“I appreciate there are some questions and concerns, especially from Thailand,” Abdullah said. “I do hope that some of these arrangements will address at least some of the concerns of the creditors and all the companies concerned.”
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