Celsius gets the nod to hold a vote for asset sale plan

Crypto lender Celsius, which filed for bankruptcy in July 2022, will be putting in a proposal to sell its assets to the Fahrenheit consortium to vote for its creditors. The move comes after a judge on August 17, 2023, had approved the platform’s disclosure that with the deal creditors could stand to recover 67% to 85% of their holdings

Judge Martin Glenn signed off the platform’s solicitation materials and disclosure statement and said that Celsius had provided its creditors with ample details to vote on the proposed financial restructuring plan. According to reports, while some creditors had opposed the proposed restructuring, the official committee formed to represent junior creditors gave it a thumbs up.

The approval marks the last step in Celsius’ long-drawn battle with bankruptcy and returning funds due to its customers. The period was marked by a tumultuous turn of events – right from disruption in crypto markets to its former CEO Alex Mashinsky being arrested for alleged fraud. Mashinsky has, however, denied the charges. 

In an emailed statement, Celsius’ interim CEO Chris Ferraro claimed that the company was completely focused on coming up with the “best outcome” for creditors and customers, and would be focusing on “returning value” as soon as possible. The platform’s bankruptcy filing is currently being supervised by New York Bankruptcy Judge Martin Glenn.

Creditors will receive ballots to vote for or against the plan between August 24 and September 22. The Fahrenheit consortium includes miner US Bitcoin Corp and Arrington Capital.

The returns accruing to creditors — which would mostly be in terms of Ether and Bitcoin tokens – could range between 67% for those with an earning account and 85.6% for those who had availed of Celsisus’ Borrow programme. According to court filings, if the crypto lender chose to liquidate its assets, the returns for creditors would be around 47%.

In July, Mashinsky was arrested for fraud charges including securities and commodities fraud and, for an alleged conspiracy to manipulate the price of Celsius’ native cryptocurrency, the CEL token. The Celsius leadership has, however, maintained that the $4.7-billion fine imposed by the Federal Trade Commission on Mashinsky won’t be affecting its plans as the company itself wasn’t prosecuted.

On its official website, Celsius claimed that the platform initiated a financial restructuring process to give the company the best option for stabilizing its business and maximizing value for all stakeholders. For implementing the restructuring, Celsius and some of its affiliates had filed voluntary petitions for restructuring under the US Bankruptcy Code’s Chapter 11. At the time of filing for bankruptcy, the crypto-lending platform had around 600,000 clients who held around $4.4 billion in interest-bearing accounts. 

The permission to seek creditors’ approval for the asset sale plan will advance Celsius’ proposal to exit Chapter 11 as a new company that’s owned by creditors.

In the recent past, crypto platforms that have filed for bankruptcy have largely been leaning toward restructuring plans. For instance, when crypto lender Voyager declared bankruptcy, around 97% of its creditors voted in favor of the platform’s sale to Binance.US. Although, Binance.US rescinded its offer later due to legal delays.

The development did not have any major impact on live cryptocurrency prices or the performance of the Top 10 cryptocurrencies.

Disclaimer: This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.

Author: Puskar Pande

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