Over 98% of Celsius Network’s Creditors Approve Reorganization Plan
More than 98% of the creditor groups of crypto lender Celsius have voted in favor of the proposed reorganization plan. This plan will return between 67% and 85% of their investments. Additionally, creditors will receive equity in a newly formed entity called “NewCo.” The restructuring agency Stretto filed a voting declaration on September 25, outlining these details.
The U.S. Trustee, responsible for overseeing bankruptcy cases, and private trustees involved in those cases have objected to the reorganization plan. However, despite these objections, the plan has been approved. The final confirmation is pending approval from the U.S. Bankruptcy Court in New York’s Southern District, with a hearing scheduled for October 2.
The proposed plan discloses the distribution of approximately $2 billion worth of Bitcoin and Ethereum among Celsius Network’s creditors. “NewCo” will expand Celsius’ Bitcoin mining operations, hold stakes in Ethereum, liquidate other assets owned by the debtors involved in bankruptcy proceedings, and explore new business opportunities while adhering to regulatory requirements.
The management team leading “NewCo” will be composed of individuals from the Fahrenheit Group, which acquired Celsius Network in May 2023. Backed by US Bitcoin Corp, Arrington Capital, Proof Group Capital Management, and Steven Kokinos, Fahrenheit Group will provide the necessary capital, management team, and technology to establish and operate the new public entity.
Celsius Network’s bankruptcy proceedings have taken a significant step forward with the approval from creditors. This approval may lead to a structured resolution that benefits all stakeholders involved.
Hot Take: Is Celsius’ Bankruptcy Nearing the End?
Celsius Network was once a major player in the global digital asset landscape, overseeing $25 billion in assets under management as of October 2021. The company allowed users to deposit various digital assets and earn interest or take out loans using their cryptocurrencies as collateral.
Last year, Celsius filed for bankruptcy during the crypto market downturn, and its former CEO, Alex Mashinsky, was arrested in July. However, the recent approval from creditors indicates progress in the bankruptcy proceedings.
While this news is positive, it comes shortly after the SEC expressed objections to Celsius’ plan to use Coinbase as a distribution agent for international customers. The SEC has sued Coinbase and believes that this plan may raise concerns outlined in its lawsuit.
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