Crypto lender Celsius Network has obtained approval from a US bankruptcy court for a restructuring plan that will return cryptocurrency to its customers and establish a new company owned by Celsius creditors.
US Bankruptcy Judge Martin Glenn in Manhattan authorized the restructuring in an order published on Thursday. The reorganized entity will be managed by Fahrenheit LLC, a consortium that includes hedge fund Arrington Capital, and will focus on mining new bitcoin and earning fees by validating blockchain transactions.
Celsius, based in New Jersey, filed for Chapter 11 bankruptcy protection in July 2022, following a freeze on customer accounts to prevent withdrawals. Once valued at $3 billion, Celsius was one of the largest crypto collapses last year.
According to a post on X (formerly Twitter), Celsius is working to implement the plan and is expected to emerge from Chapter 11 in early 2024.
Michael Arrington, founder of Arrington Capital, stated on Thursday that Celsius’ revival is distinct from other crypto companies that collapsed in 2022 and were unable to reorganize. BlockFi and Voyager Digital were wiped out in bankruptcy, and FTX remains in Chapter 11 proceedings.
“Today marks the culmination of a journey that has been far too long and far too expensive for Celsius creditors,” Arrington said in an email. “We are eager to dig in on our go-forward plan to make things whole for our creditors.”
Fahrenheit will acquire a minority stake in the reorganized Celsius for $50 million and will publicly list the new company’s stock on Nasdaq, allowing Celsius customers to sell equity shares they receive as part of their bankruptcy recovery, according to court documents.
In addition to their stake in the new company, Celsius customers will receive a partial repayment of the cryptocurrency assets they deposited on the platform.
On Thursday, Celsius announced it would return about $2 billion in cryptocurrency to account holders. When Celsius filed for bankruptcy, it had 600,000 customers who held approximately $4.4 billion in interest-bearing Celsius accounts, according to court documents.
The restructuring plan includes a settlement valuing Celsius’s proprietary crypto token, CEL, at 25 cents. A court-appointed examiner reported in January that Celsius inflated the value of its own token to benefit company insiders, using methods described by Celsius staff as “very Ponzi-like.”
The reorganized company will also pursue litigation against Celsius founder Alex Mashinsky, who faces US criminal charges and a New York civil lawsuit for allegedly misleading customers and artificially inflating the value of CEL. Mashinsky has pleaded not guilty.
Source: https://cyprus-mail.com/2023/11/10/crypto-lender-celsius-network-cleared-to-exit-bankruptcy/