Last week, crypto lending platform Hodlnaut suspended deposits and withdrawals. Like its peers, the Singapore-based start-up used the same “current market conditions” card.
However, it is worth recalling that Hodlnaut reportedly held more than $187 million in TerraUSD [UST] – now TerraClassicUSD [USTC]. And per speculations, Holdnaut suspending services was just a by-product of the dramatic downfall of the Terra ecosystem.
Hodlnaut applies for creditor protection
In the latest development, Hodlnaut has revealed that it has applied for creditor protection.
In a recently released blog post, the firm asserted that it was aiming to avoid a forced liquidation of its assets. They labeled the same as a “suboptimal solution” because that would retrospectively require them to sell their users’ cryptos like Bitcoin and Ethereum at the current “depressed” prices.
The firm, however, believes that undergoing “judicial management” will provide them “the best” chance of recovery. Elucidating on the latest step taken, the blog post noted,
“Therefore, as of 13 August 2022, Hodlnaut Pte Ltd filed an application with the Singapore High Court to be placed under judicial management.”
Per Singaporean law, judicial management is a rehabilitation mechanism for companies under financial distress. In this process, an independent officer of the Court is appointed in place of the company’s directors to manage the company. The judicial management application also provides a moratorium against legal claims and proceedings.
Elaborating on why the same was necessary, the official post read,
“This pause will provide us with the breathing space to focus our efforts on the recovery plan to rehabilitate the company.”
Even though the firm has filed its application, it revealed that it has not yet been heard in court. The firm expects the entire process to take a “few months.”