After pausing customer withdrawals last week, Singapore-based cryptocurrency lender Hodlnaut has filed for creditor protection allowing it more time to recover from its financial woes.
The crypto lender is seeking judicial management to offer it temporary protection against any legal proceedings and claims, which the firm believes would allow it “breathing space” to focus on its recovery plan. Judicial management is a law in Singapore that allows financially troubled firms to rehabilitate themselves. Hodlnaut informed its users on Tuesday via an announcement that they have applied to a Singapore-High Court for creditor protection. The application will firstly prevent the company from having to sell off assets to make up the shortfall on its books. The firm says:
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. Instead, we believe that undergoing judicial management would provide the best chance of recovery.
Secondly, the filing puts a temporary pause on any legal claims against Hodlnaut. The statement continues to say:
This pause will provide us with the breathing space to focus our efforts on the recovery plan to rehabilitate the company.
The statement also made a comment regarding affected users, saying:
While Hodlnaut is facing a difficult financial situation at the moment, not all your assets are gone.
Under judicial management, the court appoints a judicial manager for the firm that takes over the charge from the company’s director for the duration of protection. Hodlnaut has recommended Tam Chee Chong, a director of the financial consultancy firm Kairos Corporate Advisory, as the interim judicial manager. Hodlnaut says that Chong has nearly 40 years of experience in corporate finance advisory and has on multiple occasions assumed the role of judicial manager for companies undergoing restructuring. Hodlnaut’s announcement reads:
With his experience and track record, we believe he will be able to execute our recovery plan and restructure the business effectively.
As it stands, the application has not been heard by the court and Hodlnaut has given August 19 as the next date for further updates on the status of their filing.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice
Source: https://cryptodaily.co.uk/2022/08/hodlnaut-files-for-creditor-protection