Key takeaways:
- Celsius Network has declared that its Chapter 11 restructuring plan would proceed.
- The firm disclosed that it would file a disclosure statement on April 12, including details for claimants.
Celsius Network, a bankrupt cryptocurrency lender, has declared that it will proceed with its Chapter 11 reorganization plan and will provide claim holders with a disclosure statement containing information.
The Celsius debtors said in a message to users dated April 7 that they would submit a disclosure declaration on April 12. The statement was meant to provide claim holders with “adequate information” so they could vote on the NovaWulf-sponsored restructuring plan, according to a court document submitted on March 31 in the US Bankruptcy Court for the Southern District of New York.
In February, Celsius first proposed the idea, which called for the creation of NewCo, an open platform that Earn creditors would wholly own. The majority of the company’s board members will be chosen by the committee of unsecured creditors, with no “Celsius founder involvement or relationship.”
The filing on April 12 will contain information on the circumstances leading up to Celsius’ bankruptcy, projections of recovery for specific stakeholders should the restructuring plan be approved, and responses to frequently asked questions, according to the debtors’ statement regarding the proposal. On May 17, the bankruptcy court is anticipated to hold a hearing to discuss the disclosure statement’s approval, with a vote on the plan to follow.
Since submitting a Chapter 11 petition in July 2022, Celsius‘ bankruptcy proceedings in court have covered topics such as the company’s Earn program assets, cryptocurrency holdings, Bitmain discount codes, and user personal information. The bankruptcy judge accepted a settlement proposal allowing Celsius custody account holders to recover 72.5% of their cryptocurrency in March.
The bankruptcy of Celsius Network was a big deal because it was one of the first substantial crypto lenders to experience financial issues. Due to its high-interest rates on deposits and loans, the business has garnered a lot of interest in the cryptocurrency community. The bankruptcy has, however, sparked doubts about the viability of the business model and the dangers associated with crypto financing.
A big step forward for Celsius Network and the whole crypto lending sector is the Chapter 11 restructuring plan. If it works, the strategy might serve as a model for other struggling crypto lenders. The strategy is far from guaranteed to be successful, and there are still big hazards in the world of cryptocurrency financing.
