Celsius Network Receives Court Approval for Restructuring Plan
Celsius Network, a crypto lending platform, has received court approval for its restructuring plan as it works to emerge from bankruptcy. The plan allows Celsius to restructure its debts and continue operating, and it has received permission from a United States bankruptcy judge to commence creditor votes. Here are the key points:
– Celsius filed for bankruptcy in July 2022 due to a liquidity crisis caused by the downturn in crypto markets.
– The company had around 600,000 clients with approximately $4.4 billion in interest-bearing accounts.
– Celsius plans to repay its creditors by distributing at least $2 billion of cryptocurrency.
– The restructuring plan involves transitioning to a new company called “NewCo,” which will be managed by Fahrenheit Group and owned by customers.
– The new company will focus on Celsius’ bitcoin mining and staking operations and receive a minority stake of $50 million from Fahrenheit.
Hope for Customers and Investors
The restructuring plan offers hope for customers and investors caught in the crossfire of Celsius’ downfall. The plan aims to provide a repayment plan of 67% for customers with interest-bearing Earn accounts. Repayments will be made in liquid crypto assets, a portion of the new company’s equity, and proceeds from post-bankruptcy litigation against founder Alex Mashinsky. While some creditors oppose the plan, it is expected that most customers will vote in favor of it. Customers have until September 20 to participate or opt out of the settlement, and if a majority agrees, the plan will go before the court for approval in October.
Celsius’ Bankruptcy and Shutdown
Celsius is one of several crypto lenders that went bankrupt during the prolonged bear market in the crypto industry. The company could no longer pay high-interest rates to customers after many borrowers defaulted on payments. In addition to the restructuring plan, Celsius plans to shut down its mobile app within 90 days and cease operations in its current form.
Hot Take
Celsius Network’s court-approved restructuring plan brings hope to its customers and investors, offering the possibility of a significant portion of their funds being repaid. While the bankruptcy was a result of the challenging crypto market conditions, the transition to a new company and the pursuit of post-bankruptcy litigation show the efforts to recover and rebuild. The outcome of the creditor votes and the court’s final approval will determine if Celsius can successfully emerge from bankruptcy and provide a positive resolution for its stakeholders.
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