In recent developments, WazirX’s restructuring activities have sparked concern among creditors, drawing eerie parallels to the failed restructuring attempt by Vauld more than two years ago. Both companies enlisted the expertise of Kroll, a global restructuring firm, which has intensified speculations about potential mismanagement and opacity. This situation raises significant concerns about the long-term consequences for creditors involved.
The Vauld Experience: A Warning for WazirX
The restructuring plan implemented by Vauld, under the leadership of Darshan Bathija and with assistance from Kroll, left creditors far from satisfied. The strategy involved locking token values during a market downturn, which allowed Kroll and Vauld to achieve high recovery rates once the market rebounded. Despite Vauld’s efforts to refund approximately $100 million to creditors, they allegedly inflated this figure to $200 million during a market surge, seemingly to obscure their actual losses.
Vauld’s creditors also faced additional challenges. They were only permitted to file write-offs based on frozen USD values, effectively discouraging claims related to real token value decreases. This added fuel to the fire of discontent over mismanaged funds, a lack of audits, and the inability to recover $6-$8 million lost due to hacks prior to the company’s insolvency.
WazirX’s Approach to Restructuring: Learning from the Past
The memories of Vauld’s restructuring debacle linger in the minds of WazirX creditors as CEO Nischal Shetty recently proposed a similar restructuring plan, once again involving Kroll. The pressing question remains whether Kroll will accurately identify the scale of the issues and reduce users’ claims, or if WazirX will continue to present minor gains as significant victories.
When comparing Vauld and WazirX, it’s crucial to examine the level of exposure creditors face, especially as WazirX embarks on its restructuring journey. Creditors are demanding increased transparency, a commitment to recovering lost funds, and a departure from the cycles of disappointment experienced by Vauld’s users.
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