Hodlnaut creditors reject the restructuring plan, prefer liquidation

The Singapore-based troubled crypto lender is looking at a possible liquidation as the firm’s creditors have rejected the proposed restructuring plan and are seeking liquidation of the platform’s assets.

The group of creditors rejected a restructuring plan offer that allowed the current directors to look over the operations of the firm during the restructuring phase. However, a Jan. 12 hearing rejected an application to remove the interim judicial managers, reported Bloomberg.

The creditors believe restructuring plans are of no help, and it is in their best interest to wind down and liquidate the remaining assets of the firm. Algorand Foundation, one of the key creditors of the Singapore-based crypto lender, called for immediate liquidation and distribution of remaining assets among creditors to maximize the remaining value.

Hodalnut’s trouble first surfaced in August last year when the firm suspended withdrawals citing volatile market conditions and a lack of liquidity. However, it was later unravelled that the crypto lender downplayed its exposure to collapsed Terra-LUNA ecosystem and lost nearly $190 million to the first crypto contagion. The executives later deleted thousands of documents related to their investments in order to hide their exposure.

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The crypto lender sought judicial management under Singaporean laws to avoid forced liquidations. The firm was eventually placed under a creditor protection program in August with hopes of utilizing the management period to restore its asset-to-debt ratio to 1:1 and allow users the ability to withdraw their initial cryptocurrency deposits. However, the government-aided judicial management program didn’t help its cause for long.

Later in November, the firm and its founders were probed for underplaying their exposure to certain crypto tokens and misrepresentations of facts. The investigation was based on several complaints from investors between August and November 2022.

Hodlnaut and Algorand Foundation didn’t respond to Cointelegraph’s request for comments at press time.