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WazirX has received approval from the Singapore High Court to proceed with its long-awaited debt restructuring plan, a crucial step in the crypto exchange's recovery following the significant hacking incident last year.
The ruling ends several months of negotiations with creditors and includes subsequent amendments to the original proposal.
According to CEO Nischal Shetty, the Singapore High Court decision allows WazirX to proceed with its rehabilitation plan under the oversight of its parent company, Zettai Pte Ltd. Over 95% of creditors voted in favor of the restructuring in August, reflecting approximately 206.9 million in validated claims from more than 149,000 account holders.
The plan was accepted and registered under the Insolvency, Restructuring and Dissolution Act of 2018 in Singapore to share the assets equally among the creditors. The company opted for a court-sponsored Scheme of Arrangement rather than a liquidation, an expedited recovery process that would save the company both time and expense. Within this strategy, liquidation processes that would have otherwise stretched until 2030 or beyond have been averted, allowing WazirX to start providing asset restitution and gradually reinstating operations.
The exchange’s filings indicate that the first phase of token distribution is expected to begin within 10 business days of the plan’s implementation. Based on the approved valuations, users can recover approximately 85% of their account balances as of the date of the hacking incident.
The approval path entailed that the court had initially declined the initial WazirX debt restructuring proposal in June, following the regulatory issues over the token distributions. In addition, WazirX responded by modifying the scheme to direct repayments to its Indian subsidiary, Zanmai Labs, which is incorporated in India and registered with the Financial Intelligence Unit.
The amendment would address compliance issues and is expected to receive more creditor support in the second round of voting, scheduled for July 30 to August 6. Kroll Issuer Services coordinated the process and was available to users with positive account balances on July 18, 2024. This turnout showed renewed trust in the exchange's capacity to refund user funds, months after doubts emerged about how the exchange should operate.
The company that Binance acquired in 2019, Zettai Pte Ltd, was the leading player, as it handled the crypto assets and liabilities of WazirX in Singapore, with Zanmai Labs taking care of the fiat operations in India. This arrangement ensured a suitable level of jurisdictional distance and facilitated compliance with both Singaporean and Indian laws.
The approval also brings an end to a time period when Zettai was granted a court-ordered moratorium to secure WazirX against the actions of international creditors and to protect its assets. The moratorium created a space where the company could reorganize its restructuring under Singaporean law to treat both Indian and global users equally.
The hacking event had caused users to be unable to take out funds, leaving the exchange on the verge of insolvency. The recently passed plan has now provided a direction for the road to operational recovery, with WazirX able to resume trading and withdrawals within days of enactment.
Although Shetty did not provide additional information regarding the approved scheme, the court's decision is likely to provide stability and, therefore, help regain trust in the exchange's user base. The relocation marks a significant step towards WazirX regaining its composure after one of the most challenging years in its history.
