The recent developments in the Celsius case show that the embattled crypto lender is currently in court seeking final approval to initiate customer repayments by year-end and gain complete approval for its reorganization plan.
During a court hearing on Oct. 2, Christopher Koenig, the company’s legal counsel, stated that a new entity called NewCO will emerge with approximately $450 million in seed funding once the reorganization is approved.
Restructuring and Repayment Plans
According to a document filed recently, the repayment to creditors will involve a combination of $2.03 billion in Bitcoin and Ethereum and shares in the newly established company following the reorganization.
The troubled and failed cryptocurrency network seeks to refine its business by entering a new niche in Bitcoin mining. As per reports, the new company, NewCo, will offer a user-owned Bitcoin miner.
The recently established firm, poised to emerge after the restructuring, is expected to secure its funding primarily from a consortium known as Fahrenheit LLC, comprising a group of companies. According to reports, Arrington Capital leads the consortium.
Celsius’ filed document states that most creditors have approved the proposed restructuring plans. They stated that:
“The Debtors arrive at confirmation with a Plan that has the support of over 95% of voting Account Holders by both number and dollar amount. This level of support demonstrates the broad consensus that has been built over time.”
The Celsius documentation also highlighted that the debtors will start the restructuring transactions once the plans are confirmed.
According to reports, Martin Glenn, the Judge in this case, has yet to decide whether to approve Celsius’ reorganization plan. However, even if the Judge approves this plan, it still has to go through security watchdogs before it becomes official.
Celsius’ Past Rocky Months
Celsius troubles began last year following the fall of Terra and the contagion that ensued, affecting hundreds of other projects. In recent months, the network has suffered further harsher developments, including a fine of $4.7 billion by the U.S. Federal Trade Commission for mismanaging customer’s funds.
This restructuring plan, if approved, could mark one of the first successful resurrections of a failed crypto platform from 2022 through a Chapter 11 bankruptcy case. An approval will celebrate a grand end to the one-year waiting period by the network’s customers.
If the restructuring is approved, it will be the first crypto company to see a rebirth after last year’s fall. This comes even as other networks, including FTX, continue with similar plans.
At the same time, Celsius founder Alex Mashinsky is facing legal trouble of his own for fraud charges.
— Reports /TrainViral/