Hodlnaut Creditors Reject Restructuring Plan, Seek Liquidation

Beleaguered crypto lender Hodlnaut is facing possible liquidation after the firm’s creditors reject the company’s proposed restructuring plan. Creditors are instead seeking liquidation of the lender’s assets.

Reports by Bloomberg indicate that Hodlnaut’s creditors would rather have the firm liquidated and said that it better serves their interests according to a filing prepared by Hodlnaut’s interim judicial managers. Under the proposed restructuring plans, Holdnaut’s directors, who were at the helm during its collapse, would continue managing the company. According to one of the creditors, Algorand Foundation, liquidations would instead “maximize the company’s remaining assets available for distribution.”

Hodlnaut first showed signs of trouble in August 2022 when the firm suspended customer withdrawals citing “volatile market conditions” and a liquidity issue. However, it later came to the surface that the company downplayed its exposure to the collapsed Terra ecosystem, and consequently it was revealed that the lender lost almost $190 million. The company executive reportedly later got rid of thousands of documents related to company investments ins an effort to hide Hodlnaut’s exposure.

After suspending customer withdrawals, token swaps, and deposits, the firm applied for judicial management to offer it temporary protection against legal proceedings, claiming it allows it “breathing space” to focus on its recovery plan. Judicial management refers to a form of debt restructuring that sees an entity managing a business, property, and assets of a distressed company.

In November however, it was announced that the company is reportedly facing an investigation by the Singapore police related to alleged fraud and cheating. Reports suggest that the lender had downplayed its exposure to a “specific token.”

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