Hodlnaut, a crypto lending platform that went bankrupt due to the crypto winter, has been in receivership since August 2022.
The move shielded the company from legal action it would have had to face in exchange for much greater scrutiny from regulators.
Terraform Labs exposure was the main culprit
According to Hodlnaut’s management – who allegedly destroyed several documents indicating the extent of their exposure to Terraform Labs – the main reason for their downfall was the number of assets they had invested in it. As previously reported by CryptoPotatoHodlnaut had invested around $190 million in UST.
After trying to keep the platform afloat, Hodlnaut’s management eventually filed for bankruptcy and went into receivership, stating from the start that they were considering restructuring the platform and bringing it back.
Unfortunately for them, the crucial element of the restructuring, namely new funding, did not materialize.
No silver lining
Earlier this year, it was already clear that creditors did not see much hope in Hodlnaut’s resurrection and would prefer to recover at least some of their assets after liquidation.
However, a new document published by advisers Ernst&Young confirms that any restructuring process is “unlikely to be feasible”.
The document confirms that, despite Hodlnaut’s best efforts, the company was unable to find a potential investor who could provide the liquidity to get it back on its feet.
Separately, the newspaper reveals that creditors holding the lion’s share of claims – around 55.38% – voted in favor of full liquidation. Creditors preferring a restructuring solution control only 2.42% of the claims on Hodlnaut, much of which appears to be actually controlled by the company’s own executives.
As a result, the courts opted for a decision in favor of liquidation if the circumstances remain unchanged.
“The lawyer for Mr. Simon Eric Lee has confirmed that there is no new injection of funds available. In these circumstances, the Court found that it was not convinced that a compromise and/or potential arrangement could be approved without a new injection of funds and therefore ordered the IJM to proceed with the filing of a petition for liquidation. of the company with a competitor asks to be released as IJM.
The mediation proposal was fiercely opposed, particularly by major creditors such as Samtrade Custodian and the Algorand Foundation, the latter having been hit hard by the collapse of 3AC and Hodlnaut.
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