Hodlnaut Bankruptcy Creditors Reject Restructuring Plan-Prefer Platform Liquidation Instead
According to Bloomberg, a group of key creditors of crypto lender Hodlnaut Pte have rejected a proposed restructuring plan and are seeking liquidation of the assets of the beleaguered platform. Despite the results of a January 12 Hearing (wherein the Court rejected an application to remove the platform's interim judicial managers), this group of creditors rejected the current restructuring plan wherein the current directors would oversee the platform's operations throughout the restructuring phase of the bankruptcy proceeding.
It is the belief of these creditors that the present restructuring plan provides no help for the platform going forward. One of the major creditors of the platform, Algorand Foundation, is calling for the immediate sale and distribution of Hodlnaut's remaining assets in an attempt to maximize the value remaining.
You might remember, Hodlnaut's troubles began with the platform suspending withdrawals in August of 2022. The reasons given by Hodlnaut at that time were 'volatile market conditions' and 'lack of liquidity. However it was learned later that the platform's executives downplayed the firm's exposure in the crumpled and failed Terra system. This Terra exposure cost the company almost $190 million. In an attempt to hide this exposure from disclosure, Hodlnaut's executives deleted thousands of company records related to Terra ecosystem investments.
Fact is Hodlnaut's intentions in filing for interim judicial management was to avoid liquidation in the first place. Under the laws in Singapore, judicial management is a consumer protection program which permits firms that are financially troubled to 'rehabilitate'. In this system, the Court appoints a judicial manager who's job is to take control of the firm from the company's directors.
In Hodlnaut's case, the management period was to be used to hopefully restore the platform's asset-to-debt ratio to 1:1 and to permit platform stakeholders to withdraw all initial investments. Apparently in the case of Hodlnaut, the interim judicial management system did not work.
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