- Crypto lender Hodlnaut is heading towards liquidation after creditors rejected a restructuring plan for the company.
- Liquidation is preferred since it better serves creditors’ interests and maximizes the company's remaining assets available for distribution.
- Judicial managers argue that Hodlnaut’s woes emanated from the collapse of Terraform Lab’s sister tokens LUNA and UST, bringing about losses of $190 million.
Hodlnaut, a crypto lending firm, froze withdrawals in August 2022 and was placed under Interim Judicial Management (IJM). The lender suffered from the collapse of Terraform Labs and its sister tokens in 2022.
Hodlnaut creditors prefer liquidation over financial restructuring
Hodlnaut, a Singapore-based crypto lending platform, has rejected the proposed restructuring plan for the company, according to a recent Bloomberg report. The crypto lender’s creditors prefer liquidation over restructuring in order to maximize the company’s remaining assets for distribution. Algorand Foundation, a not-for-profit community organization focused on protocol governance is one of the Holdnaut creditors that have rejected the restructuring proposal.
Hodlnaut froze withdrawals in August 2022 and applied to be put under judicial management on August 13, five days after it froze withdrawals. On August 29, Hodlnaut's legal representatives attended a court hearing alongside two creditors, and submitted nominations for IJM candidates.
The judge appointed Ee Meng Yen Angela and Aaron Loh Cheng Lee of EY Corporate Advisors Pte. Ltd., as Hodlnaut's interim judicial managers. Do Kwon’s Terraform Lab’s ecosystem suffered a collapse after algorithmic stablecoin UST lost its peg. Crypto lender Hodlnaut was hit with $190 million in losses since it converted a significant amount of crypto to TerraUSD (UST), according to the IJM.
Hodlnaut is one of the several crypto companies that succumbed to the pressures of FTX contagion. Singapore-based exchange Zipmex received creditor protection after trading firm Three Arrows Capital imploded in June 2022.
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