Celsius Network Plans to Repay Creditors with Crypto Assets
Celsius Network, a digital asset lender that filed for bankruptcy, has announced its intention to repay creditors using billions of dollars in crypto assets by the end of the year. The company has presented a restructuring plan to a US bankruptcy court, which includes generating funds for a new spinoff called “NewCo” and facilitating customer repayments.
Celsius Aims to Clear $2 Billion Debt
The plan outlines the distribution of at least $2.03 billion in cryptocurrency to creditors, with the actual amount subject to fluctuations in the crypto market. The distribution will occur through the NewCo transaction or an orderly wind down. The NewCo transaction involves creating a new cryptocurrency company focused on Bitcoin mining and staking, owned by customers. It aims to list on NASDAQ for maximum liquidity and will be managed by experienced crypto operators from Fahrenheit.
Equity Stake and Wind-Down Option
Fahrenheit Group has committed up to $50 million as an equity stake in NewCo, aligning the interests of Fahrenheit and creditors who will own shares in the new company. If the NewCo transaction cannot be completed, an orderly wind-down option is included in the plan that would provide better recoveries for creditors compared to liquidation under Chapter 7.
Restructured Company Receives Funding
Celsius Network’s restructured company, expected to emerge from Chapter 11, will receive $450 million in capital and financial backing. However, the success of the NewCo transaction remains the focus as it could mark a significant milestone as the first revival of a failed crypto platform under Chapter 11.
Deliberation and Opposition
The approval of Celsius’s plan is currently under deliberation by Judge Martin Glenn. Some customers who have been unable to access their funds have expressed opposition. An affiliate of Lantern Ventures, owed $82 million, has also challenged the plan, claiming overvaluation of the new business by Celsius’s advisors. Clearance from securities regulators will be necessary for the new venture.
Hope for Creditors and the Crypto Industry
Celsius Network’s proposed plan represents a significant effort to repay creditors and potentially revitalize the company, providing hope for both the cryptocurrency industry and affected stakeholders. However, if the new company were to fail, liquidation could become a possibility, leading to lower repayments for customers.
Hot Take: CEL Token Performance
The CEL token is currently trading at $0.1535, reflecting a 1.1% decline in the past 24 hours. However, it has experienced a notable upward trend in the last 30 days with a surge of over 21% during this period.
Featured image from Shutterstock, chart from TradingView.com
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