More than a week ago, the troubled crypto lender Hodlnaut froze user assets on the platform. Now, the Singapore-based firm has applied for judicial management.
Hodlnaut is a crypto lender that let users deposit cryptocurrencies like Bitcoin and Ethereum and earn interest. It is one of many crypto lenders to be struck down during the latest downturn in crypto market.
First and foremost, the application, which was officially filed on August 13, will prevent the firm from having to sell its assets to make up for any shortfall on its books.
“We are aiming to avoid a forced liquidation of our assets as it is a suboptimal solution that will require us to sell our users’ cryptocurrencies such as BTC, ETH and WBTC at these current depressed asset prices,” today’s announcement read.
The application will also grant other advantages on its windy road to recovery.
The first will see an independent third party replace Hodlnaut’s directors to manage the company and oversee affairs.
The firm has applied to appoint Chee Chong Tam, a former partner at Deloitte Southeast Asia and the current director of Kairos Corporate Advisory, to take on the role of judicial manager. Tam is also Hodlnaut’s choice for interim judicial manager while Singapore courts review the firm’s application.
Second, perhaps more importantly, the filing will temporarily pause any legal claims against the firm.
“This pause will provide us with the breathing space to focus our efforts on the recovery plan to rehabilitate the company,” continued Hodlnaut’s statement.
As for affected users, the statement added: “while Hodlnaut is facing a difficult financial situation at the moment, not all your assets are gone.”
Hodlnaut joins crypto liquidity crunch
Hodlnaut is one of a number of crypto lenders, including Celsius, Voyager, and BlockFi, that have faced financial difficulties after this year’s crypto market crash.
Celsius’ Chapter 11 filing revealed that the firm’s liabilities outweighed its assets by a whopping $1.2 billion. On July 6, Voyager also filed for bankruptcy after pausing user withdrawals just five days prior.
As for BlockFi, Sam Bankman-Fried, the CEO of crypto exchange FTX, provided a $250 million bailout package with plans to acquire the New Jersey-based lender.
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Source: https://decrypt.co/107523/hodlnaut-files-creditor-protection-get-breathing-space-rehabilitation
