Hodlnaut pursues liquidation after creditors turned down restructuring plan

Key Takeaways:

  • Hodlnaut’s key creditors want the company to be liquidated immediately.
  • The crypto lender intends to distribute as much of the company’s surviving assets as it can.

Hodlnaut, a Singapore-based crypto lender, appears to be on the verge of collapse after its creditors dismissed a suggested turnaround strategy and demanded the company’s assets be sold off instead.

They think that winding down the company and selling its assets would be in their best interests because the reorganisation would not assist the crypto lender get out of its current bind.

In an effort to increase  the amount of assets still available for distribution, the creditors of the crypto lender favour liquidation over restructuring.

According to a document submitted on January 11 by Hodlnaut’s court-appointed temporary judicial managers, Hodlnaut believes that closing down the company is in its collective interest.

Among the Holdnaut creditors who have turned down restructuring suggestions is the Algorand Foundation, a non-profit community organisation oriented around protocol governance.

Last September, the Algorand Foundation disclosed a $35 million investment in Hodlnaut. According to Algorand, the funds were surplus to day-to-day needs and reflected less than 3% of the Foundation’s assets.

Hodlnaut’s challenges first became apparent in August 2022, when the company stopped withdrawals owing to unstable market situation and a shortage of liquidity. Moreover, it was eventually discovered that the crypto lender overstated its vulnerability to the defunct Terra ecosystem, resulting in a loss of nearly $190 million.

A clause in the restructuring program that would have allowed the directors who oversaw Hodlnaut’s blunder to persist managing the business was opposed by the creditors group.

The ambiguity surrounding the proposed restructure raises fears about the firm ’s survival. In the meantime, a Friday hearing resulted in the denial of a request to dismiss the interim judicial managers.

2022 did not prove to be a good year for Hodlnaut, the lender even had to Lay off 80% of the Working Employees. According to Hodlnaut, there were “pending procedures” involving the corporation and Singapore authorities, and the layoffs were done to cut costs.

Aadrika Sharma
Aadrika Sharma

I enjoy writing and try to learn new things every passing day!

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