Celsius Network bankruptcy case concludes with a restructuring plan for repaying customers
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Celsius Network recently received approval from a New York judge, allowing it to start a restructuring plan meant to repay the customers’ assets via a new firm owned by Celsius creditors. The new firm is managed by Fahrenheit, which will pivot the business and help it pay back customers in several ways.
We are pleased to share that, following a successful creditor voting process and Confirmation hearing, the Court confirmed our Plan of Reorganization. https://t.co/bSemZ5f0k8
— Celsius (@CelsiusNetwork) November 10, 2023
Restructuring permission granted
The restructuring permission was signed off last Thursday by the US Bankruptcy Judge Martin Glenn. According to the plan, Fahrenheit will assist in paying back the debt through means like earning staking fees by validating blockchain transactions and Bitcoin mining.
Celsius Network filed for bankruptcy in July 2022, after previously freezing customer assets. At the time, numerous companies suffered in the aftermath of the Terra collapse, and Celsius was no exception. However, after the bankruptcy filing, an investigation revealed that the company’s former executive managed to cash out as much as $21 million just before bankruptcy.
Furthermore, the company’s former chief executive officer, Alex Mashinsky, faced a lawsuit by New York’s attorney general. Mashinsky was arrested and charged with fraud, to which he pleaded not guilty. For the moment, he still awaits trial, which is scheduled for September 2024.
As the companies started bidding for the opportunity to manage the new firm, Fahrenheit won. The new company will be funded by a fund of $450 million in crypto, which is held by Celsius, in addition to $50 million investment made by Fahrenheit.
Celsius will require the SEC’s approval as well
Despite the fact that Judge Glenn approved the plans, some reports indicate that the US Securities and Exchange Commission will also be involved. Allegedly, the SEC will have to sign off on the plan before it can move forward. Furthermore, the SEC will even propose the listing of the new company.
Finally, the US securities regulator will be given a chance to challenge any crypto asset transactions if they suspect that said transactions involve securities.
Speaking of the vote, Celsius noted that 95% of voting creditors were in favor of the plan, which marked another significant milestone in the company’s ongoing efforts to maximize the distribution of assets to its customers. Assuming that the SEC will approve the restructuring as well, the company will be ready to implement the plan and emerge from Chapter 11 in early 2024, according to its announcement on X.
