After Zipmex, Crypto Lender Hodlnaut Files for Creditor Protection
Hodlnaut, a cryptocurrency lender and borrower based in Singapore, has recently filed for legal management. This will help the platform to restructure the business.
Just over a week ago, the crypto platform had suspended its withdrawals, deposits and swaps.
It has also frozen user resources on the platform itself. The crypto lender allows users to accurately deposit cryptocurrencies such as Bitcoin and Ethereum and then earn interest.
Hodlnaut is among many crypto lenders who have faced the aftermath of the crypto downturn.
Hodlnaut had recently informed users that they have applied to the Singapore High Court for a legal direction.
Judicial management is a law in Singapore that allows financially beleaguered companies a breather to restore themselves.
The company has mentioned,
We aim to avoid a forced liquidation of our assets as it is a sub-optimal solution that would require us to sell our users’ cryptocurrencies such as BTC, ETH and WBTC at these current depressed asset prices. Instead, we believe that undergoing legal management will provide the best opportunity for recovery.
How does the legal management help the crypto lender
Under the Judicial Management Act, which is a recognized law in Singapore, the court is responsible for appointing an officer.
This officer is called the chief justice who for the troubled company will take over the charge from the director of the company for a moment. Appointing a presiding judge can take up to a few months for the court.
In the event that the court has not confirmed and is still waiting to do so, the firm may apply to appoint an interim presiding judge to act temporarily in the same capacity.
The entire process of appointing a judge can take a considerable amount of time and up to “a few months”. The crypto lender has said it will provide a next update on the firm’s progress on August 19.
More details
Hodlnaut’s application is set to provide other assistance to the restructuring program. As mentioned above, an independent third party will replace the crypto platform’s directors to run the company and oversee affairs.
Hodlnaut has now applied to appoint Chee Chong Tam who has been a partner at Deloitte South East Asia in the past and is also the current director of Kairos Corporate Advisory as Chief Legal Officer.
Chee Chong Tam had been Hodlnaut’s choice as interim presiding judge while the Singapore court continues its review process.
Once approved, the law will protect the platform from legal claims and lawsuits for the current time period. This in itself would help the firm buy some time and channelize their efforts to restructure and recover to bring the company back on track.
