Celsius Network Seeks Approval to Make Customer Payments
Celsius Network, the insolvent crypto lending company, is seeking court approval to begin making payments to its customers by the end of the year, according to the firm’s legal counsel Christopher Koenig. This was revealed during an October 2 bankruptcy court hearing.
NewCo: A Key Component of the Reorganization Plan
A crucial element of Celsius Network’s proposed reorganization plan is the establishment of a new company called NewCo. NewCo has secured $450 million in seed funding and will focus on Bitcoin mining and staking. The details were outlined in a filing presented during the confirmation hearing.
NewCo will be owned by Celsius’ customers but managed by Fahrenheit, a consortium that won a bid to acquire Celsius Network in May 2023. Fahrenheit has committed to injecting up to $50 million as an equity stake in NewCo. The management team of Fahrenheit will be compensated with NewCo Common Stock to align their interests with creditors who will own NewCo, according to the filing.
Bitcoin and Ethereum Distribution
The proposed plan, initially outlined in August, also involves distributing approximately $2 billion worth of Bitcoin and Ethereum among Celsius’ creditors.
In addition, NewCo plans to maximize liquidity by listing on the Nasdaq stock exchange. Creditors will receive equity in this newly formed entity.
Celsius Addresses Objections
Although most creditors have expressed their support for the restructuring plan, some remain opposed to it. The filing notes 12 formal objections and 12 informal objection letters received from creditors, including objections from the U.S. Trustee and the U.S. Securities and Exchange Commission (SEC).
Celsius Network has provided responses defending its arguments against each objection. The plan’s approval is currently being considered by Judge Martin Glenn, with the ultimate success dependent on securing approval from U.S. regulatory authorities.
Hot Take: Celsius Network Nears Payment Approval
Celsius Network is making progress in its efforts to make payments to customers by the end of the year. With the proposed reorganization plan centered around NewCo, a new company with substantial seed funding, Celsius aims to address creditor concerns and distribute $2 billion worth of Bitcoin and Ethereum among them. The plan also involves listing NewCo on the Nasdaq stock exchange for increased liquidity. Despite objections from some creditors and regulatory authorities, Celsius Network remains optimistic about its future prospects.
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