An update for our users

To our users, thank you for your patience and understanding since our last announcement. We have heard your feedback on the intervals of our communication we have provided since our first update, and therefore moving forward, we aim to provide more frequent short updates. 

As we work towards stabilising our financial situation, the Founders and the Hodlnaut team in Singapore are working closely with our lawyers, and have weighed various available options for our next steps. 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 BTC, ETH and WBTC at these current depressed asset prices. Instead, we believe that undergoing judicial management would provide the best chance of recovery. Therefore as of 13 August 2022, Hodlnaut Pte Ltd filed an application with the Singapore High Court to be placed under judicial management. 

Judicial management is a mechanism under Singapore law for companies under financial distress to rehabilitate their business. In this process, an independent officer of the Court is appointed in place of the company’s directors to manage the company (also known as a Judicial Manager). In addition, the judicial management application provides a moratorium (or temporary pause) against 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.

Pending the appointment of a Judicial Manager by the Singapore Court, the Court may appoint an Interim Judicial Manager to act in such a capacity. We have applied for Mr Tam Chee Chong of Kairos Corporate Advisory Pte Ltd to be appointed as the Interim Judicial Manager and subsequently, the Judicial Manager. These applications, though filed, have not yet been heard in court and may be subject to change depending on the outcome of the court hearings. 

We understand the anxiety this news has caused our users, and we endeavour to provide more frequent updates moving forward. These updates will be added to https://www.hodlnaut.com/blog/news and communications will continue to be via email (support@hodlnaut.com), Twitter (@hodlnautdotcom) and Hodlnaut Telegram (https://t.me/hodlnaut). Our next update remains on 19 August, where we hope to provide more substantive updates on the judicial management process. Thank you for your patience with us. 

Frequently Asked Questions (FAQ)

1. What is Judicial Management? Why is Hodlnaut going through this process?

Judicial management is a mechanism under Singapore law for companies under financial distress to rehabilitate their business. In this process, an independent officer of the Singapore Court (the “Judicial Manager”) is appointed in place of the company’s directors to manage the company. 

One effect of applying for judicial management with the Singapore Court is that there is a moratorium (or temporary pause) against legal claims and proceedings against the Hodlnaut. This pause will provide us with the breathing space to focus our efforts on the recovery plan and rehabilitation.

2. What is Interim Judicial Management?

The timeline for a Judicial Manager to be appointed by the Singapore Court may take up to a few months. Pending the decision by the Singapore Court on whether to appoint a Judicial Manager, a company may apply to appoint an Interim Judicial Manager to act on a temporary basis.

In order to ensure that Hodlnaut is able to prepare and execute its recovery plan, especially given the robust and volatile nature of the crypto industry, we have applied for our proposed Judicial Manager (Mr Tam Chee Chong) to be appointed as Interim Judicial Manager to step into the shoes of the directors and keep the company running smoothly. 

3. How did Hodlnaut select the Judicial Manager? 

Mr Tam Chee Chong has over 37 years of corporate and financial advisory experience and has worked in various Big 4 accounting firms over the years. He has taken on the role of Judicial Manager in various companies which underwent restructuring. With his experience and track record, we believe he will be able to execute our recovery plan and restructure the business effectively.

4. How long does this whole process take?

The time frame to obtain a judicial management order from the Singapore Court may take up to a few months. In the meantime, in order to ensure that Hodlnaut Pte Ltd is able to prepare and execute its recovery plan as soon as possible, we have applied for Mr Tam to be appointed as the Interim Judicial Manager of the company.

5. Is my money all gone? Are there larger, secured creditors that will get their money ahead of me? 

No, 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.

6. When will I be able to withdraw my assets?

Unfortunately, we are unable to provide a definite date as to when we are likely to re-enable withdrawals. We will leave this in the hands of our Judicial Manager, or Interim Judicial Manager, if so appointed.

7. I urgently need my money now, and I don’t mind liquidating my assets at these prices. Can I withdraw now instead of going through a Judicial Management process?

We apologise that we are unable to facilitate any withdrawal of funds at this juncture. We will be exploring available solutions on allowing our users to tap into emergency exit liquidity, but these are currently still subject to discussions and approvals by various stakeholders.