The U.S. Bankruptcy Court has approved Celsius Network LLC’s transition from a failed crypto lender to a Bitcoin mining business, setting the stage for the company to begin repaying its customers.
Judge Martin Glenn confirmed the company’s plan to compensate its creditors using a mix of digital assets and shares in the new Bitcoin mining operation, which will be publicly traded. According to Celsius’s legal team, asset distribution could commence early next year, providing long-awaited relief for affected customers whose accounts have been frozen for over a year.
Celsius Network’s Collapse
Though Celsius Network filed for Chapter 11 bankruptcy protection in 2022. The bankruptcy file it submitted to the court revealed that the company held $4.3 billion in assets against $5.5 in liabilities, amounting to around $1.2 billion in deficits. The majority of the $5.5 liabilities consisted of the $4.72 billion worth of user deposits.
Meanwhile, Celsius has been seeking a way out to restructure and compensate the customers. Upon the filing of Chapter 11, the company made a statement that it may repay the customers by the mining equipment it possessed at the time. Celsius’s mining operation, Celsius Mining LLC, could “over time” generate enough assets to repay some loans. The mining branch owned 80,850 mining rigs, out of which 43,632 were “in operation.”
The Restructuring Plan
In the following year, Celsius Network explored the potential plans for reorganization and eventually received the permission from the court to poll account holders on its plan to restart as a “new user-owned company,” while giving the users unwilling to participate an option to opt out.
Over 95% of voting creditors voted in favor of the Plan, marking another significant milestone in Celsius’ ongoing efforts to maximize the distribution of assets to its customers.
— Celsius (@CelsiusNetwork) November 10, 2023
The restructuring plan, according to Celsius, had 95% of the voted creditors voting in favor. The final approval from the court marks a “significant milestone in Celsius’ ongoing efforts to maximize the distribution of assets to its customers.” With the permission from both the authorities and the creditors, Celsius said that the plan is pending the approval from the Securities and Exchange Commission (SEC), and the company may seek an eventual liquidation if the mining operation proposal collapses.
If everything works out, Celsius expects to implement the plan and “emerge from Chapter 11” in early 2024.
Read the full article here