Celsius Network Offers Settlement Option to Account Holders
Celsius Network, the troubled cryptocurrency lender, has reached a crucial stage in its bankruptcy proceedings. As part of its Modified Joint Chapter 11 Plan of Reorganization, the company has made a settlement option available to its substantial account holders. This option aims to address the liabilities of account holders who made significant transfers within the ninety days leading up to the petition date of July 13, 2022.
Withdrawal Preference Exposure and Repayment
The administrators of the Celsius bankruptcy have submitted a notice of intent to inform creditors. According to the notice, account holders who withdrew more than $100,000 within the 90-day timeframe may be required to repay these funds. Those with “withdrawal preference exposure” exceeding $100,000, who did not reject the reorganization plan and did not opt out of releases, are included in this category. By making a payment equal to 27.5% of the total amount by January 31, 2024, these individuals can fulfill their obligation.
Exclusion and Potential Consequences
Account holders with exposure of $100,000 or less are excluded from this action and do not need to take any steps to settle their Withdrawal Preference Exposure. However, those who fail to reach a settlement may face legal consequences from the Litigation Administrator after the Effective Date.
Settlement Payment in Cash
Due to logistical challenges with cryptocurrencies like Bitcoin and Ethereum, settlement payments can only be made in cash. This is because such forms of payment would complicate the Plan’s Effective Date. The Election Form provides bank account information for wire transfers and instructions for making cash contributions directly to the appropriate party.
Celsius’s Restructuring Efforts
This settlement option is part of Celsius’s larger restructuring efforts following its bankruptcy filing. With a $1.2 billion deficit on its financial sheet, the company filed for bankruptcy on July 13, 2022. As part of the restructuring plan accepted by creditors, a portion of the holdings will be returned to account holders, and the remaining assets will form a new mining business under Celsius’s control.
Hot Take: Celsius Network Offers Account Holders Settlement Option Amid Bankruptcy Proceedings
Celsius Network has taken a significant step in its bankruptcy proceedings by offering a settlement option to its account holders. This option aims to address liabilities related to significant transfers made within a specific timeframe. While some account holders may be required to repay funds, others with lower exposure are excluded from this action. It is crucial for account holders to consider reaching a settlement to avoid potential legal consequences. The settlement payment must be made in cash due to logistical challenges with cryptocurrencies. This move is part of Celsius’s broader restructuring efforts as it navigates its bankruptcy and plans for the future.
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