Majority of creditors want Hodlnaut liquidated

Creditors of Singapore-based cryptocurrency lender have again expressed their desire to liquidate the company, which has been under judicial management since August 2022. There is no white knight investor on the horizon, interim judicial manager (IJM) Aaron Loh Cheng Lee explained in a circular updating the case.  

A circular from the IJMs dated April 25 said users representing approximately 55.38% of creditors, with claims of 228.3 million Singapore dollars (about $170.5 million), have indicated they would favor liquidation over restructuring. No source of fresh capital has been found, the letter noted, despite the founders’ efforts to find new investors:

“There appears to be no indication of a white knight investor to date, and hence no prospect of any fresh capital injection.”

Only users with 2.42% of claims supported restructuring, and almost all of those claims comprised company directors, and a mediation proposal had been opposed by the “major” creditors. The major creditors include Samtrade Custodian and S.A.M. Fintech, both in liquidation, and the Algorand Foundation. Algorand has $35 million exposure to Hodlnaut.

The Singapore court directed the IJMs to petition to “wind-up” the company and apply to discharge themselves, according to the letter.

Related: Hodlnaut founders propose selling the firm instead of liquidation

Hodlnaut announced it was suspending withdrawals on Aug. 8, 2022, due to a liquidity crisis. It applied for judicial management the following week, which under Singaporean law, temporarily protected it against legal claims. “We are aiming to avoid a forced liquidation of our assets as it […] will require us to sell our users’ cryptocurrencies such as BTC, ETH and WBTC at these current depressed asset prices,” the company said at the time.

Aaron Loh Cheng Lee and another IJM are affiliated with EY Corporate Advisors.

The company was reportedly under police investigation for misrepresenting its exposure to the Terra stablecoin now called TerraUSD Classic (USTC). On-chain data indicated the company had held at least $150 million worth of the defunct coin, despite claims to the contrary. Company executives deleted thousands of documents to hide their exposure.

Creditors began seeking the company’s liquidation in January.

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