Hodlnaut Founders Suggest Selling Over Liquidation

The founders of troubled crypto lender Hodlnaut are desperately trying to save the firm despite its creditors calling for its liquidation. Co-founder Simon Lee has stated selling the business would be a better option than liquidating.

Despite the firm’s creditors seeking its liquidation, Hodlnaut’s founders have suggested trying to save the company instead of selling the firm. Hodlnaut’s interim judicial managers released an affidavit from Hodlnaut co-founder Simon Lee in which he stated the company’s founders proposed selling the firm instead of liquidating it. Lee argued that selling the firm would be a better option for creditors.

Bloomberg reports Lee said he and the firm’s other co-founder Zhu Juntao had contacted several “potential white knight investors” in a bid to save the firm. He added they believe the “Hodlnaut user base can be acquired and onboarded on a digital-asset platform owned or affiliated to such investors”. He argued this approach would “maximise” value for Hodlnaut’s creditors.

Lee’s affidavit affirms the company’s willingness to sell the firm as it works with potential investors to sell its business. Hodlnaut has reportedly received inquiries from various potential buyers.

Creditors Reject Restructuring Plans, Opting Instead for Liquidation

The announcement from the firm’s co-founders comes after Hodlnaut’s creditors rejected the company’s proposed restructuring plan. In January, Bloomberg reported that Hodlnaut’s creditors would rather have the firm liquidated, arguing that it better serves their interests. The firm’s proposed restructuring plan indicated that Hodlnaut’s directors, who were at the helm during its collapse, would continue managing the company.

One of Hodlnaut’s creditors, the Algorand Foundation, said liquidations would instead “maximise the company’s remaining assets available for distribution.”

The company first showed signs of distress in August 2022 when it was forced to suspend customer withdrawals citing “volatile market conditions” and liquidity issues. However, it was later revealed that the firm downplayed its exposure to the Terra ecosystem. Hodlnaut was forced to disclose that it lost almost $190 million due to Terra’s collapse.

After the company suspended customer withdrawals, token swaps and deposits, it applied for judicial management to offer it temporary protection against legal proceedings while it works on a recovery plan.

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