Celsius, the crypto company that filed for bankruptcy in June last year, is preparing to reopen. While the bankruptcy proceedings are not yet fully completed, they are nearing their end. Celsius utilized the Chapter 11 bankruptcy process, which allows bankrupt companies to restructure their debts and attempt to reopen instead of liquidating their assets. In July of this year, Celsius submitted a plan to the bankruptcy court that included repaying funds to creditors and reopening the company.
One key factor in resolving the bankruptcy proceedings is that Celsius calculated its debts to customers in fiat currency rather than cryptocurrencies. This means that the company can revalue its remaining assets, taking advantage of the rise in BTC’s market value since the bankruptcy filing. The first of two settlements ensures that creditors will receive 105% of their claimed amount, settling the company’s debts and addressing fraud and misrepresentation claims.
With enough cash on hand, Celsius plans to invest up to $500 million into a new venture called NewCo, focusing on staking and crypto mining. While some doubts exist about this shift from crypto loans to mining, it is unlikely that the plan will be rejected as most creditors have agreed to the repayment terms. The approval of the bankruptcy court is still required before operations can begin.
Once approved, NewCo could become operational soon after, with creditor repayments starting by the end of the year. This quick recovery is possible because a significant portion of Celsius’ customer assets remained with the company. The support for the plan from 95% of creditors indicates that it is generally favorable for all parties involved. Although there are risks associated with changing the business model, investors in this sector are accustomed to taking risks.
Hot Take: Celsius Prepares to Reopen After Bankruptcy Proceedings
Celsius is on track to reopen its doors after filing for bankruptcy last year. By utilizing Chapter 11 bankruptcy proceedings, Celsius has developed a plan to restructure its debts and return funds to creditors. The key to this resolution lies in the revaluation of assets, taking advantage of the market value increase since the bankruptcy filing. With approval from the bankruptcy court expected, Celsius plans to invest in a new venture focused on staking and crypto mining. While some doubts exist about this shift in business model, the support from creditors suggests a positive outcome. As operations resume, Celsius aims to restore value to shareholders and continue its business with newfound stability.
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