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When it comes to financial recovery, the path a company takes during the crisis can define its future—and the fate of its Creditors. Recently, Zettai has been granted leave to convene a meeting with the Creditors of the crypto exchange, WazirX.
Zettai has recently conducted Townhalls to give a walkthrough to all the Creditors about the Scheme process, how they can check their Rebalanced Net Liquid Platform Asset (NLPA), and participate in the voting process. To implement Restructuring, the Scheme should pass through successfully.
There are two scenarios: Creditors can get approximately 85.25% as per the Rebalanced NLPA if the Scheme is approved and effective, or wait till 2030 or later to get recovery in FIAT. Creditors must weigh their options carefully: should they support the Restructuring or brace for the unpredictable outcomes of liquidation?
Understanding the Two Options
- Scheme of Arrangement: It allows a Company to propose a debt restructuring plan to its Creditors. This approach aims to provide the fastest, fairest, creditor-approved, and legally binding resolution to crypto balances. Expected recoveries from the Scheme are higher and delivered more quickly than the recoveries that Scheme Creditors would likely receive if a restructuring was not possible.
- Liquidation: Liquidation is the process of winding up a company in accordance with the IRDA.While equitably supervised by an independent officer, it would likely be costly and would not offer potentially the same level of recovery as a Scheme.
Why is the Scheme of Arrangement Better Than Liquidation?
| Scheme of Arrangement | Liquidation | |
| Higher Recoveries | In the base case scenario outlined in the Explanatory Statement, it is expected 99.6% USD recoveries. | In the base case scenario, it is estimated 80.4% USD recoveries due to high liquidation costs. |
| Faster Access to Distributions | If the Scheme is effective, the first distribution will be completed within 10 business days of the Effective Scheme Date, with a tentative timeline of April/May 2025. | A Liquidation cannot commence until the ownership dispute is resolved. Distribution will be delayed by at least two to five years. |
| Greater Transparency and Creditor Control | Once the Scheme is approved and effective, the Scheme legally binds Zettai to deliver to its terms, driving transparency, trust, and accountability | A Liquidator will run the liquidation process and is not obligated to take any creditor input. |
| Potential for Market-Driven Upside | Creditors get to participate in future market movements with TOKEN distributions instead of FIAT | Creditors will receive distributions in FIAT, which does not allow participation in crypto market movement and Upside |
Legal Considerations
Approval of the Scheme by creditors requires at least 50% vote in favor, and at least 75% of creditors by value in each class present and voting. Once approved, the Scheme will be sanctioned by the Court, becoming legally binding for both the Company and its creditors. This process ensures transparency and sets clear timelines for informed decision-making.
A Smarter Path Forward
Scheme of Arrangement aims to provide the fastest, fairest, creditor-approved, and legally binding resolution, unlike liquidation, keeping unnecessary delays and uncertainties at bay.
By supporting the Scheme, Creditors take an active role in securing a better outcome—not just for themselves but for the entire community. Choose wisely!
Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.
