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Crypto Lender Hodlnaut Secures Creditor Protection for Restructuring

UTC by Bhushan Akolkar · 2 min read
Crypto Lender Hodlnaut Secures Creditor Protection for Restructuring
Photo: Unsplash

The troubled crypto lender has been allotted Interim judicial management to work on rehabilitating a distressed company via debt and property reorganization.

On Tuesday, August 30, troubled crypto lender Hodlnaut announced that they have been granted interim judicial management and creditor protection. Hodlnaut added that the judge has appointed Ee Meng Yen Angela and Aaron Loh Cheng Lee as their interim judicial managers.

Creditor Protection for Hodlnaut

Interim judicial management is the process when a third-party attempts to rehabilitate a distressed company via property reorganization and debt. The company has been shielded by its creditors from legal proceedings.

On its official Telegram channel, Hodlnaut said that it is not providing any additional details. Besides, Hodlnaut has also not fixed any dates for further upgrades. The crypto lender had first filed for judicial management earlier this month on August 13.

The third-party interim managers shall now join to restructure the company’s operations. This would also avoid liquidating their crypto holdings such as Bitcoin (BTC) and Ethereum (ETH) at a hefty loss.

Last week, Hodlnaut had to cut off 80% of its staff in order to save money. However, there were some pending proceedings with the Singapore Attorney General as well as the Singapore police. Hodlnaut said that “these actions are taken in what we believe to be in the best interests of our users”.

The decision for judicial management comes three weeks after Hodlnaut decided to freeze withdrawals, deposits, and token swaps. This “gives us [Hodlnaut] the time to work closely with our legal advisors to come up with the best possible restructuring and recovery plan for our users,” said Hodlnaut.

The crypto lender is currently having a financial shortfall of $193 million. It also has an outstanding liability of $281 million while managing assets worth $88 million.

Singapore’s Crypto Regulations

The crypto market turmoil this year in 2022 has engaged regulators to give serious thought to the crypto regulatory framework. Furthermore, they have been working on ways to introduce greater consumer protection measures.

The biggest bankruptcy episode in the crypto space has been the fall of Singapore-based hedge-fund Three Arrows Capital. Recently, Singapore’s central bank – the Monetary Authority of Singapore (MAS) – has stepped in to come up with potential guidelines to protect investors and prevent frivolous investments.

These protections would include a limitation to personal credit lending and customer suitability tests. Also, the measures would asses how to “mitigate consumer harm”.

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