SINGAPORE – Beleaguered crypto lender Hodlnaut on Saturday (Aug 13) filed an application with the High Court to be placed under judicial management, the company announced in a statement on Tuesday.
It added that judicial management would provide the best chance of recovery.
“We are aiming to avoid a forced liquidation of our assets as it is a suboptimal solution that will require us to sell our users’ cryptocurrencies such as Bitcoin, Ether and Wrapped Bitcoin at these current depressed asset prices,” Hodlnaut said.
Judicial management is a mechanism under Singapore law for companies under financial distress to rehabilitate their business.
If granted, it will provide a temporary pause on legal claims and proceedings against Hodlnaut.
“This pause will provide us with the breathing space to focus our efforts on the recovery plan to rehabilitate the company,” the company said, without elaborating on what the recovery plan entails.
The move comes after a string of bankruptcies in the crypto sphere, including those of hedge fund Three Arrows Capital and lender Celsius Network.
Aside from Hodlnaut, brokerage Voyager Digital and exchange Zipmex had also filed for bankruptcy protection.
The High Court has since given Zipmex a three-month extension of its moratorium shielding Zipmex Asia and key operating subsidiaries from potential creditor lawsuits.
“While Hodlnaut is facing a difficult financial situation at the moment, not all your assets are gone. As it stands, as we have halted all withdrawals, no user will receive priority in withdrawals,” the crypto lender said.
Hodlnaut added that it has applied for a judicial manager, who will help in the restructuring of the company and in determining a definite date for re-enabling withdrawals.
Hodlnaut has applied for Mr Tam Chee Chong of Kairos Corporate Advisory to be appointed as its interim judicial manager and, subsequently, judicial manager.
Mr Tam has more than 37 years of corporate and financial advisory experience, including as judicial manager in various companies that underwent restructuring.
The timeline for a judicial manager to be appointed by the High Court may take up to a few months.