- Celsius intends to partially reimburse its creditors using assets including Bitcoin, Ethereum, and stock.
- If approved, Celsius would be among the first failed crypto platforms to be resurrected through a Chapter 11 bankruptcy case.
Celsius Network is aiming to repay its customers soon and seeks to initiate the process before the end of 2023. The company presented its restructuring plan to a judge during a 2 October hearing in New York. It is now seeking final court approval for the proposal.
During the confirmation hearing, Celsius Network’s legal counsel, Christopher Koenig, revealed that the new entity, referred to as “NewCo,” would emerge from the proceedings with $450 million in seed funding.
#Celsius will distribute at least $2.03B of crypto to Creditors.
Meanwhile, NewCo will be seeded with up to $450 million in crypto.— Celsius NewCo Community (@CelsiusNewCo) October 2, 2023
According to a filing made on 29 September, Celsius intends to partially reimburse its creditors using assets including $2.03 billion worth of Bitcoin [BTC], Ethereum [ETH], and stock in NewCo.
The new company, NewCo, has garnered support from a consortium called Fahrenheit LLC. This firm will oversee the mining and staking operations for NewCo.
The presiding judge, Martin Glenn, is currently evaluating Celsius’s restructuring plan. It is worth noting that the plan will also require clearance from regulatory authorities. Although over 95% of votes are in favor both in terms of numbers and dollar amounts, it is facing opposition from certain creditors.
If the plan is approved, Celsius Network would be among the first failed crypto platforms from 2022 to be resurrected through a Chapter 11 bankruptcy case. This move holds the promise of bringing relief to Celsius customers.
Most, if not all, have been awaiting restitution since the suspension of withdrawals in June 2022. It was triggered by the collapse of the Terra/Luna ecosystem.
Plan for customer reimbursements part of reorganization strategy
Celsius Network’s restructuring plan represents a way to address the fallout from the Terra/Luna ecosystem’s collapse. The plan outlines a clear path towards repaying customers and creditors and potentially reviving the platform’s operations.
Christopher Koenig, Celsius’s legal counsel, emphasized the company’s commitment to implementing the proposed plan and commencing customer repayments by the end of the year. He also underscored the crucial role of NewCo in facilitating this process.
The proposal’s fate now rests in the hands of Judge Martin Glenn. Glenn will determine whether Celsius’s restructuring plan aligns with legal requirements and serves the best interests of all stakeholders. Regulatory approval will also play a pivotal role in determining the plan’s feasibility and implementation.
Despite the challenges, Celsius Network remains committed to delivering on its promise of customer and creditor repayments. This could potentially mark a significant turnaround for the embattled crypto lender.
