Troubled crypto lender Hodlnot is seeking protection from creditors a week after it halted withdrawals amid a liquidity crisis.
In its first update, the crypto platform said that it has filed an application with the Singapore High Court under judicial management.
“We aim to avoid forced liquidation of our assets as this is a suboptimal solution that would require us to sell our users’ cryptocurrencies such as BTC, ETH and WBTC at these current depressed asset prices,” it said.
Hodlnaut hopes for breathing space
According to Singapore law, judicial management is a way to fix businesses in financial difficulties. Under this, a judicial manager is selected to oversee the affairs, operations and assets of a firm in financial distress as part of the judicial management technique of debt restructuring.
The business has a chance to rebuild while being temporarily protected from legal action by outside parties. The company has requested that Tam Chi Chong of Kairos Corporate Advisory be appointed as interim judicial manager and later as judicial manager.
“This pause will give us breathing space to focus our efforts on the recovery plan to rehabilitate the company,” Manch said. Meanwhile, as the application awaits the court hearing, the platform has vowed to provide the next update by the end of the week.
Hodlnaut has not yet provided a timeline for users to withdraw funds. But, generally, it can take several months to get a judicial management order from a Singapore Court.
Zipmex, Wald demand equal protection
Recently, a Singapore court granted Zipmex creditor protection for three months, giving the exchange time to consult with regulators and develop a strategy to address the $53 million exposure from crypto lenders Babel Finance and Celsius .
In a similar move, the court had earlier given Wold three months of creditor protection as there was a liquidity crisis in the industry land at the doorsteps of Singapore courts.
Last week, Hodlenote suspended withdrawals, token swaps and deposits for its users based on recent “market conditions”.
At the same time it was reported that Hodlnot had informed the Monetary Authority of Singapore (MAS) of its intention to withdraw its license application relating to regulated digital payment tokens (DPTs).
Meanwhile, once the South Asian hub for cryptocurrency businesses, Singapore has been dealing with recent bankruptcy incidents.
Last month, MAS President Tharaman Shanmugaratnam said in a written reply to a parliamentary question that the Monetary Authority of Singapore is “carefully considering the introduction of additional consumer protection safeguards.”