Crypto Lender Hodlnaut Faces Liquidation
In a recent court filing, it has been revealed that Singapore-based crypto lender Hodlnaut is facing liquidation. The winding-up order was filed on November 10, and the company’s former interim judicial managers, Aaron Lee and Angela Ee, have been appointed as liquidators. Hodlnaut previously applied for creditor protection after incurring significant losses due to the collapse of the Terra ecosystem, and it also had crypto assets locked on FTX before the exchange declared bankruptcy. With more than 17,000 creditors, the decision for liquidation was favored over a restructuring plan. This development highlights the challenges and risks faced by cryptocurrency lenders in a volatile market.
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Crypto Lender Hodlnaut Faces Liquidation
Background Information
Hodlnaut, a Singapore-based cryptocurrency lender, is set to be liquidated following a winding-up order filed by the company’s liquidators on November 10th. The decision to liquidate the company comes after it suffered significant losses due to its exposure to the collapsing Terra ecosystem in May 2022. Additionally, Hodlnaut had approximately $13.3 million worth of crypto locked on FTX before the exchange froze withdrawals and filed for bankruptcy in November 2022.
Filing for Liquidation
Hodlnaut applied for creditor protection in August of this year, citing losses of around $189 million from its Terra ecosystem exposure. The company’s attempt to restructure its operations and recover from these losses was met with resistance from its creditors. Ultimately, the creditors rejected the proposed restructuring plan and favored liquidation as a better option to serve their interests. The winding-up order was filed in May and approved by the High Court of Singapore on Friday.
Creditors’ Decision
The decision by Hodlnaut’s creditors to reject the restructuring plan and opt for liquidation reflects their belief that this course of action would result in a more favorable outcome for them. Liquidation would involve the sale of Hodlnaut’s assets to repay its debts and distribute any remaining funds to its creditors. By taking this route, creditors hope to recoup a larger portion of their investments.
Appointment of Liquidators
Aaron Lee and Angela Ee have been appointed as the liquidators of Hodlnaut. As liquidators, their role is to oversee and manage the winding-up process, including the sale of assets and the distribution of funds to the company’s creditors. The appointment of experienced professionals in this field ensures that the liquidation process is conducted efficiently and in compliance with the relevant legal requirements.
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Overview of Hodlnaut
Hodlnaut is a Singapore-based cryptocurrency lender that offers various lending services to crypto holders. The company provides a platform for users to deposit their crypto assets and earn interest on them. Hodlnaut’s services cater to both retail and institutional investors, offering them opportunities to generate passive income from their crypto holdings.
Losses Due to Terra Ecosystem Exposure
Hodlnaut’s losses can be attributed to its exposure to the collapsing Terra ecosystem. The Terra ecosystem is a blockchain platform that supports stablecoins linked to various fiat currencies. In May 2022, the Terra ecosystem experienced significant issues that resulted in the collapse of its stablecoins’ value. As a result, Hodlnaut, which had invested heavily in the Terra ecosystem, suffered substantial losses.
The impact of these losses on Hodlnaut was significant, leading to financial instability and the need for creditor protection. The company’s inability to recover from these losses ultimately led to its decision to file for liquidation.
Locked Crypto on FTX
Hodlnaut had approximately $13.3 million worth of crypto locked on the FTX exchange before it froze withdrawals and filed for bankruptcy. FTX is a cryptocurrency derivatives exchange that offers a wide range of trading and investment options. Hodlnaut’s crypto holdings on the exchange became inaccessible when FTX halted withdrawals due to its own financial difficulties.
FTX’s subsequent bankruptcy filing further complicated the situation, as it meant that Hodlnaut’s locked crypto assets were at risk of being permanently lost. This added to the financial challenges faced by Hodlnaut and contributed to the decision to pursue liquidation.
Winding-up Order Filed
The winding-up order for Hodlnaut was filed on November 10th, marking the official start of the liquidation process. The order was submitted to the High Court of Singapore, which has jurisdiction over the case. This formal filing initiates the legal procedures necessary for the orderly winding-up of Hodlnaut’s operations.
Winding-up Application and Approval
Hodlnaut’s winding-up application was filed in May of this year, indicating the company’s acknowledgment of its financial difficulties and the need for creditor protection. The application process involved providing detailed information and supporting documentation to the court to demonstrate the viability and necessity of the proposed liquidation.
The High Court of Singapore reviewed Hodlnaut’s winding-up application and approved it on the specified date. The court’s approval validates the decision to proceed with the liquidation and grants the necessary authority to the appointed liquidators to carry out their duties.
As the liquidation process unfolds, the court’s oversight ensures that it is conducted in accordance with the Insolvency, Restructuring, and Dissolution Act of 2018, which governs such proceedings in Singapore.
With the appointment of Aaron Lee and Angela Ee as liquidators, Hodlnaut’s creditors can expect the liquidation process to proceed smoothly and efficiently. These experienced professionals will manage the sale of the company’s assets, the repayment of debts, and the distribution of funds to the creditors. Their expertise in insolvency matters ensures that all legal requirements are met and that the interests of the creditors are protected.
In conclusion, Hodlnaut’s decision to pursue liquidation is a response to its significant losses and the rejection of its restructuring plan by creditors. The appointment of liquidators and the subsequent approval by the High Court of Singapore sets in motion a comprehensive and organized process for winding up the company’s operations. While the decision to liquidate may be disappointing for Hodlnaut and its stakeholders, it represents a pragmatic approach to address the company’s financial challenges and maximize the recovery for its creditors.
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