Crypto Lender Hodlnaut Seeks Judicial Management to Avoid Forced Liquidation

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Singapore-based crypto lending platform Hodlnaut is seeking forensic management to manage its ongoing liquidity crisis and avoid forced liquidation of assets in the current bear market.

The Crypto Lender informed its users in an announcement on Tuesday that they have applied to the High Court of Singapore to be placed under judicial management. The company said:

“We aim to avoid a forced liquidation of our assets as this is a sub-optimal solution that will force us to sell our users’ cryptocurrencies such as BTC, ETH and WBTC at these currently depressed asset prices. . Instead, we believe that legal treatment would offer the best chance of recovery.

Judicial management is a law in Singapore that allows companies in financial difficulty to rehabilitate. Under this law, the court appoints an officer called the judicial director of the company in difficulty who temporarily takes over from the director of the company. The appointment of a receiver can take up to a few months. Until confirmed by the court, the company may request the appointment of an interim manager to act on an interim basis in the same capacity.

Hodlnaut recommended Tam Chee Chong, director of the financial advisory firm Kairos Corporate Advisory, as acting and then judicial director. The crypto lender said Chong has nearly four decades of corporate finance advisory experience and served as a legal director at various companies that have undergone restructuring. The announcement said:

“With his experience and track record, we believe he will be able to execute our turnaround plan and restructure the business effectively.”

The application has not yet been heard by the court and the firm has given August 19 as the next date for further updates on its application for judicial management.

If approved, the law will also temporarily shield Hodlnaut from lawsuits and lawsuits that the company says would provide “breathing space to focus our efforts on the turnaround plan to rehabilitate the business.”

Related: Celsius Network Coin Report Shows $2.85 Billion Balance Gap

Hodlnaut has become one of many crypto lenders to fall prey to the crypto contagion initiated by the collapse of TerraUSD Classic (USTC) and fueled by the insolvency of multi-billion dollar crypto hedge fund Three Arrows Capital, which had borrowed several million dollars in loans from these crypto lenders. The crypto lender suspended all trading activities as well as deposits and withdrawals on August 8, citing market conditions and the liquidity crunch.

Although Hodlnaut has avoided any exposure to 3AC, multiple reports and on-chain data suggest the company held approximately $150 million in USTC at one point. Hodlnaut did not respond to Cointelegraph’s requests for comment at press time.

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