Hong-Kong-based crypto lender Babel Finance which operated out of Singapore has been granted an extension of its creditor protection by a Singaporean court, according to Flex Yang, the company’s co-founder.
The extension is expected to last for approximately three months, providing the crypto lender with additional time to address any outstanding financial obligations and potentially avoid insolvency.
During the period of the extension, the crypto firm plans to bring into place a restructuring plan via a new decentralized finance project named Hope. This initiative will allow the firm to explore new opportunities for growth and sustainability within the crypto lending market.
Deribit, the top options exchange for Bitcoin and Ether and a creditor of Babel Finance, had expressed concerns about the restructuring plan. To this end, the exchange requested an independent advisor, Alvarez & Marsal, to monitor the plan.
During the bearish crypto market in 2022, Babel Finance was one of several crypto lending companies which had undergone significant liquidity challenges.
In June 2022, the crypto lending platform was forced to halt withdrawals and redemptions from its products owing to unexpected liquidity pressures. Reports indicate that the crypto lender suffered a loss of $280 million from proprietary trades involving customer funds.
Babel Finance Owes Creditors Up to $800 Million
Babel Finance is indebted to its creditors for an amount that could surpass $800 million. In an effort to repay this debt, the company has requested an extended period of creditor protection to implement its restructuring plan.
This plan involves the issuance of “Babel Recovery Coins,” which will be generated by a new decentralized finance project. The revenue generated by this project will be used to repay the company’s outstanding debts to its creditors.
In a recent Twitter post, Flex Yang, co-founder of Babel Finance, revealed that the Singapore High Court officially initiated the in-court restructuring procedure for the company on April 17. Yang emphasized his commitment to the new decentralized finance (DeFi) project called Hope, saying that it would be his primary focus moving forward.
He stated:
In the coming international political changes, HOPE will be an important tool for us to reconnect the world. We are confident that our new team will continue to use their hope and light to move the new project forward.
Babel Recovery Coin
In early March, Yang Zhou, another co-founder of Babel Finance, first introduced the Hope project. He explained that the project’s native token, Babel Recovery Coin, is a stablecoin that is collateralized with Bitcoin and Ethereum. The token is designed to maintain a 1:1 peg with the US dollar through the use of arbitrage incentives for traders.
Babel launched Hope in mid-March 2023. The project aims to combine the benefits of DeFi and centralized finance, providing both transparency and security that DeFi offers while also allowing for easy access that centralized finance provides.
