When Hodlnaut first went to the Singaporean Court for protection due to becoming insolvent I had some hope that they would be able to straighten out and recover. This was around the time that lending companies ran into this issue and since Hodlnaut had applied for a license in Singapore I had assumed that the government had done some due diligence. Once the Interm Judicial Managers though began to report the health of the company and how lopsided the liabilities vs assets any sort of optimism I had rapidly died. 

It came out that what Hodlnaut's original team had done was they took over half of the deposits and moved them into UST, Terra Luna's failed stablecoin, so when this coin when from its $1 peg to mear cents well there went everyone's money as well. What I find particularly interesting about this is that they could have diversified into USDC and DAI as they accepted those as deposits you could earn yield on yet they did not do that at all instead putting all their eggs into one basket. 

From this, there have been two main plans submitted to try and "fix" the company. One of the ideas was more or less what one would expect and that was liquidating the company. Meaning that all assets that are remaining will be sold off or returned to users. The type of distribution that will occur from this is unknown as Hodlnaut has over 100,000 creditors, people they owe money to, and the vast majority of these creditors are small creditors. Where with FTX there is the idea to make the small investors or account holders whole first this would be extremely difficult in this situation because the majority of the holders are small and so they alone could consume the vast amount of funds returned. 

The company directors though (those who were in charge before the bankruptcy protection) believed there was an alternative and submitted the alternative restructuring plan. This plan would have the fiat liabilities paid off with existing fiat reserves, I guess they had enough to do this, and the rest of the digital assets would be pooled together. Since this was submitted by the directors who caused this mess in the plan they would be put in charge of the pooled assets. Some of the parts of the plan are pretty laughable like 

Any recoveries obtained by the Group and trading profits arising from trades and investments made using assets from the pool will form part of the asset pool, and the directors and/or shareholders of the Group will make guaranteed contributions to the asset pool if the trading profits do not reach its agreed quarterly targets.

Other parts though I see the idea and logic behind however unlikely it would be that it would work. For instance 

The liabilities owed by the Group to the users will be converted to a new cryptocurrency token (“New Tokens”) which will be issued to the users at a rate of US$1 to 1 New Token. The New Tokens will be backed by the asset pool, and no New Tokens will be issued after completion of the ARP. The New Tokens will have a call option exercisable within or after a fixed period of time after issuance, that would allow users to redeem the New Tokens at a pro-rata amount based off the value of the asset pool and the number of New Tokens remaining. A mandatory redemption of all New Tokens can also be triggered upon occurrence of an event of default, for example, failure by the directors and/or shareholders to make contributions, the making of trading losses, etc. Users of the Group also have the option of electing for an early exit (“Early Exit Option”) via a Reverse Dutch Auction, instead of receiving New Tokens. A fixed sum will be set aside to fund the Reverse Dutch Auction and the retirement of users’ liabilities will be in order of decreasing rates of discount. The Early Exit Option will expire once the fixed sum is utilised.

Of the various appointed Interm Judicial Management firms they are united in that the alternative plan is not good at all for creditors. At the heart of the matter is that there is little to no chance of a white knight investor and without new funds, it isn't possible to rehabilitate the company. Issues with the Directors still remain as they continue to not be transparent or turn over everything that they need to. Trusting them with then with the assets after the horrible decisions that have been made is extremely questionable, to say the least. 

I know that if the court opted for the alternative plan I would be the first one to take the early exit option to just get whatever I can and be done with it all. The mess that has encompassed this company is insane and sometimes you just want to get what you can and get out. It is unfortunate that I have assets on this platform but I will say at least this is the only one that I am trapped on. The total amount I have on the platform is 0.01107 BTC and 68.5566 USDC not a ton but at the same time, not exactly a small amount. With a current market value of roughly $300 USD, I would be thrilled to be able to get back $100. 

With this market downturn, I have been able to help alleviate this blow with the usage of my Fold card. Through the end of this month (January 2023) Fold is taking its REKKT relief to its users. If you use a referral code, here is mine, when you sign up for a free Fold Debit Card you will earn 50,000 sats. This is the number of sats needed to withdraw from Fold. These referral sats though I believe will take 30 days before you can withdraw them but I could be mistaken. If anyone signs up with my referral code please let me know in the comments below if you were able to or not! 

Please know I am not a financial advisor and make sure you do your own research! If you enjoyed this article and would like to support me further below are a few referral links that if you used when signing up I would appreciate it! Also, follow me on Twitter @Cje95_

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