Beleaguered cryptocurrency lender, Hodlnaut, was placed under interim judicial management (IJM) by the Singapore High Court on August 29, a few weeks after the company halted its services due to the recent market slump.
IJM is a form of creditor protection where a court offers financially distressed entities protection against legal proceedings and claims from creditors attempting to liquidate their assets.
Judicial management also offers troubled firms enough breathing space to devise reorganizational plans to revive their financial strength under the court’s supervision and monitoring.
Court Appoints Two Judicial Managers to Hodlnaut
According to the announcement, Justice Aedit Abdullah appointed two creditors, Ee Meng Yen Angela and Aaron Loh Cheng Lee from EY Corporate Advisors, as its judicial managers.
“The Court has delivered judgment on August 29, 2022, and has been confirmed that Hodlnaut will be placed under Interim Judicial Management,” Hodlnaut said.
The company applied to be placed under judiciary management a few days after pausing token swaps, deposits, and withdrawal of funds from its platform on August 8, citing unstable market conditions.
During the application, the crypto lender first nominated Tam Chee Chong, who works at Kairos Corporate Advisory Ltd., as its interim judicial manager, which the court denied before requesting further nominations on August 26.
More Crypto Firms Seeking Creditor Protections
Meanwhile, Hodlnaut is not the only troubled crypto firm that has sought creditor protections due to financial troubles that stemmed from the recent market crash.
Earlier this month, Vauld, a cryptocurrency lender backed by billionaire Peter Thiel and leading American crypto exchange Coinbase, received three months of creditor protection from the Singapore High Court.
In July, another troubled lender Celsius Network suspended operations due to a liquidity crisis caused by the bear market and filed for Chapter 11 bankruptcy protection in the United States Southern District Court of New York. The company said the filing would give the platform breathing room to develop a restructuring plan to maximize value for its stakeholders.
Coinfomania also reported in the same month that crypto brokerage company Voyager Digital filed for bankruptcy protection against its 100,000 creditors, seeking the best way to protect its assets and maximize customer value.