Summary:
- Creditors affected by the Celsius bankruptcy have overwhelmingly endorsed a reorganization plan that will return approximately $2 billion worth of Bitcoin and Ethereum to them.
- The plan also introduces “NewCo,” a new company, offering equity to creditors and focusing on Bitcoin mining, Ethereum staking, asset monetization, and regulatory-compliant business ventures.
- The reorganization plan is scheduled for a final approval hearing at the U.S. Bankruptcy Court for the Southern District of New York on October 2.
- Celsius faced significant financial challenges, leading to its bankruptcy filing, and was subsequently sued by the SEC for alleged fraudulent activities.
- Celsius Creditors Unite: Overwhelming Support for Reorganization Plan
In a pivotal development for the cryptocurrency community, creditors impacted by the Celsius bankruptcy have overwhelmingly voted in favour of a reorganization plan that promises to return cryptocurrency assets to their rightful owners and offer equity in a new entity.
The reorganization plan, which garnered extensive support from the Official Committee of Unsecured Creditors, entails the distribution of approximately $2 billion worth of Bitcoin and Ethereum to creditors. This significant step forward has been marked by an overwhelmingly positive response, with the majority of creditor classes voting in favour of the plan, each exceeding a resounding 98% approval rate. The endorsement comes as a ray of hope for those affected by the Celsius bankruptcy.
NewCo Emerges: A New Chapter in Celsius’ Journey
The next crucial stage in this process will take place at the U.S. Bankruptcy Court for the Southern District of New York, where the case will be heard, and final approval will be determined. The eagerly awaited hearing is currently scheduled for October 2, following the deadline for creditor votes, which concluded on September 22. This reorganization plan, crafted with the backing of the Official Committee of Unsecured Creditors, not only promises the distribution of substantial cryptocurrency assets but also introduces a new entity named “NewCo” into the equation.
Under the plan, creditors will not only regain access to their digital assets but will also receive equity in NewCo. This new company is set to take the reins of Celsius’ Bitcoin mining operations, participate in Ethereum staking, unlock value from the Debtors’ other illiquid assets, and explore fresh regulatory-compliant business opportunities.
The management of NewCo will be entrusted to the Fahrenheit Group, a consortium that successfully secured the acquisition of Celsius’ assets in May. The involvement of the Fahrenheit Group adds a layer of expertise and strategy to the reorganization plan, with a focus on reinvigorating Celsius’ operations and delivering value to creditors.
Celsius’ Turbulent Path: Navigating Bankruptcy and Legal Challenges
Celsius’ journey to this point has been marked by challenges, as the company filed for bankruptcy last year, leaving billions of dollars in debt to investors. Furthermore, in July, the U.S. Securities and Exchange Commission (SEC) took legal action against Celsius and its former CEO, Alex Mashinsky. The SEC alleged that Celsius had raised billions through fraudulent and unregistered sales of “crypto-asset securities,” deceiving investors about its financial position and manipulating the price of CEL, the native token of the company.
As the reorganization plan progresses toward final approval, it holds the promise of a brighter future for those impacted by the Celsius bankruptcy, reaffirming the cryptocurrency community’s resilience and commitment to resolving complex challenges within the digital asset landscape.
Also Read: Celsius CEO’s Downfall: Arrest in New York and SEC Lawsuit Unravel a Crypto Catastrophe