Key Takeaways
- Celsius plans to exit bankruptcy with $450 million in seed funding.
- The exchange plans to repay users by the end of 2023
- Celsius plans to partially repay its creditors using $2.03 billion in BTC, ETH and stock
Celsius Network, a beleaguered crypto lending platform, is making strides in its effort to repay customers and restructure its operations following its Chapter 11 bankruptcy filing in July 2022. During a pivotal bankruptcy hearing on October 2nd, the company presented an ambitious plan to Judge Martin Glenn in New York, outlining its path to recovery.
Celsius, represented by legal counsel Christopher S. Koenig, unveiled its strategy to emerge from bankruptcy as “NewCo.” The rebranded entity is set to launch with a substantial $450 million in seed funding.
The company also disclosed plans to partially repay creditors with $2.03 billion worth of Bitcoin. This move aims to address the prolonged issue of frozen funds that has plagued Celsius customers since June 2022.
Crucially, Celsius has secured the support of Fahrenheit LLC, a consortium of companies that will play a key role in managing the mining and staking operations of the new entity. Nevertheless, the future of Celsius’ lending business remains to be determined as the company pivots towards a different model.
Despite the promising aspects of the plan, Celsius faces several hurdles. The restructuring plan must gain approval from Judge Martin Glenn, and regulatory clearance is another critical step. It is worth noting that some creditors have challenged the proposal, even though it received overwhelming support, with more than 95% of voting account holders endorsing it in terms of both numbers and total amount.
Celsius remains committed to repaying its customers by the end of 2023, a commitment made back in June. Originally planning to relaunch in August, Celsius sought input from its customers, and on September 26th, the company announced that an impressive 95% of customers had voted in favor of the recovery plan.
In addition to cryptocurrency distribution, Celsius intends to offer creditors stock in the newly formed company and a stake in ongoing litigation against former Celsius CEO Alex Mashinksy and other executives.
Celsius, once one of the world’s largest crypto lenders, filed for Chapter 11 bankruptcy protection in mid-July 2022. At the time, Celsius said it had between $1 billion and $10 billion in assets and liabilities and over 100,000 creditors.
