Earlier today, Singapore-based lending platform Holdnaut shared its plans to stay afloat during its ongoing liquidity crisis amidst the crypto winter. The company has filed an application for judicial management with the Singapore High Court.
Holdnaut is yet another platform that felt the widespread impact of the Terra collapse. On-chain data and other reports indicate that the crypto lender may have owned USTC worth $150M at one point. The company halted all operations, including deposits and withdrawals on August 8.
According to the team, the poor state of the market and a liquidity crisis had fueled the move.
Singaporean law offers financially troubled companies a judicial management mechanism while they work towards recovery. Platforms that apply see the court replace its director with an independent official known as a judicial manager. The manager supervises the company’s operations, and the court also provides them with creditor protection.
Protection and Moratorium
Holdnaut explained its decision to apply in its release. The crypto lender’s main goal is to avoid a forced liquidation of their assets in response to their current liquidity issue. According to the team, this is an unsatisfactory option as it would call for them to sell their investors’ crypto holdings.
The publication highlighted the assets in Holdnaut’s possession and noted that the firm would have to sell at poor prices. Having reviewed the situation with their lawyers, the team and founders have decided judicial management is the best solution.
As stated earlier, the court provides a moratorium, which is a temporary pause alongside a judicial manager. This will shield the company against legal action and proceedings from creditors. The Holdnaut team intends to use this time to take a breather and turn their attention to helping the crypto lender bounce back.
This pause will provide us with the breathing space to focus our efforts on the recovery plan to rehabilitate the company.”
Holdnaut Selects an Interim Manager
Notably, the process leading up to the appointment of a judicial manager may run up to a couple of months. Hence, until the company’s application receives court approval, the court may appoint an interim judicial manager. In the meantime, this person may perform the same function as a judicial manager.
Holdnaut has put in an application for Mr. Tam Chee Chong of Kairos Corporate Advisory Pte Ltd to be their interim manager. The lender has hopes that following his temporary appointment, Chong could steady the ship. Chong has reportedly spent almost 40 years in corporate finance advisory.
The Holdnaut release pointed out that he has been a judicial manager with various companies trying to reorganize:
With his experience and track record, we believe he will be able to execute our recovery plan and restructure the business effectively.”