Celsius Network Emerges from Bankruptcy
Celsius Network has announced its emergence from bankruptcy after an eighteen-month process. The plan of reorganization has been confirmed, which includes a $3 billion payout to creditors and the creation of Ionic Digital.
Distribution of Crypto and Fiat
Celsius’ reorganization plan involves the distribution of over $3 billion in cryptocurrency and fiat to creditors. This plan was approved by 98% of account holders and confirmed by the Bankruptcy Court for the Southern District of New York.
Creation of Ionic Digital
Ionic Digital is a new entity that has been established through the reorganization. It is owned by creditors, and there are plans for its stock to become publicly traded in the future. Hut 8 will manage the operation of this Bitcoin mining company under a four-year management agreement.
New CEO Appointed
Matt Prusak, previously serving as Chief Commercial Officer at Hut 8, has been appointed as the CEO of Ionic Digital. He will work closely with the Board of Directors, which consists mostly of members designated by the UCC.
Transition to “MiningCo Transaction”
Celsius has decided to transition to the “MiningCo Transaction” following feedback from the SEC and consultation with the Official Committee of Unsecured Creditors. This transition aims to increase transparency and compliance.
Joint Statement on Exit from Bankruptcy
“Our exit from bankruptcy is the culmination of an extraordinary team effort and extensive collaboration between Celsius, Hut 8, strategic partners, and our creditors. When we were appointed in June 2022, everyone assumed Celsius would disappear completely like the other crypto lenders that were filing bankruptcy around the same time. We, however, believed that Celsius could navigate complicated legal, regulatory, and business issues.”
Cessation of Operations
Celsius will cease its operations, leading to the discontinuation of its mobile and web applications.
Controversial Proposals
Celsius Network raised the argument of “unsecured creditors” in court to access client funds. The platform issued a warning to users who withdrew over $100,000 in the 90 days before the bankruptcy declaration, urging them to address their outstanding liabilities promptly or potentially face litigation.
Kirkland & Ellis lawyers instructed these users to return 27.5% of their withdrawals by January 31st or risk clawback measures. This proposal received significant criticism.
Hot Take: Celsius Network Emerges from Bankruptcy and Distributes $3 Billion to Creditors
Celsius Network has successfully emerged from bankruptcy after an extensive process. With a reorganization plan approved by the majority of account holders and the court, over $3 billion in cryptocurrency and fiat will be distributed to creditors. The creation of Ionic Digital provides a new opportunity for creditors to own equity through common stock. Hut 8 will manage this Bitcoin mining company as part of a four-year management agreement. The appointment of Matt Prusak as CEO further strengthens Ionic Digital’s leadership. Celsius’ decision to transition to the “MiningCo Transaction” demonstrates a commitment to transparency and compliance. Although operations will cease, Celsius’ exit from bankruptcy signifies its resilience amidst challenging circumstances.
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