Creditors of crypto lending platform Hodlnaut have rejected a proposed restructuring plan and would prefer to liquidate the company.
Hodlnaut, a Singapore-based crypto lender, is considering liquidating itself after its creditors rejected a proposed restructuring plan and demanded the platform’s assets be sold off.
The creditors’ group rejected a restructuring plan proposal that would have let the incumbent directors run the company during the restructuring phase.
Bloomberg stated that a hearing on January 12 denied a request to fire the interim judicial managers. The creditors believe that winding down the company and selling off its remaining assets is in their best interests because they believe restructuring efforts are useless.
One of Hodlnaut’s major creditors, the Algorand Foundation, demanded that the company be immediately liquidated and that the remaining assets be divided among the creditors in order to maximize the value of what was left over.
When the company banned withdrawals in August 2022, citing erratic market conditions and a lack of liquidity, Hodlnaut’s problems were apparent for the first time.
It was discovered that the crypto lender had overstated how vulnerable it was to the collapse of the Terra ecosystem and had actually lost close to $190 million.
Later, in an effort to reduce their liability, the executives erased thousands of papers pertaining to their investments.To prevent forced liquidations, the cryptocurrency lender sought judicial administration under Singaporean law.
In August, the company was finally put under a creditor protection program with the intention of using the management time to bring its asset-to-debt ratio back to 1:1 and enable users to withdraw their initial cryptocurrency investments.
However, the government-sponsored judicial management program wasn’t very effective in advancing its goal. Later in November 2022, the company’s founders were investigated for falsifying information and downplaying their exposure to particular crypto coins. Multiple investor complaints between August and November 2022 served as the foundation for the investigation.
