A popular failed Crypto lender proposed a new plan to exit bankruptcy & save its creditors against the loss because of the company’s bankruptcy decision.
Celsius was a popular crypto lender platform but failed in mid-2022. After May of the last year, Celsius was facing financial challenges because of several crashes in the crypto market. On 12 June, Celsius officially announced to stop withdrawal & redemption for the customers, citing low liquidity on the platform. Finally somewhere in mid of July 2022, Celsius filed for bankruptcy under chapter 11 code in a New York-based bankruptcy court.
On 15 Feb 2023, the Celsius team announced a plan to exit the bankruptcy phase and also to benefit the former customers, who lost funds on Celsius.
The Celsius team stated that they decided to get support from NovaWulf to reorganise a new company with the use of Celsius’ illiquid funds.
In the new company “NewCo holding”, Celsius will use all of its funds & infrastructure support like the Crypto mining business to fund.
The Celsius Official Committee of Unsecured Creditors (UCC), a body representing the interests of Celsius account holders, is in support of this plan and also the UCC team will manage the hiring of new staff for the new company with the surety of prohibition of any Celsius’ current or ex-employees hiring. In short, UCC will play the role to maintain the trust level with Celsius creditors so that the new company will remain 100% independent & away from Celsius workforce.
Under this new plan, all the Celsius creditors with claims valued at $5,000 and below on the petition date will be placed in a “Convenience Class,” receiving “a one-time distribution of liquid crypto” paid in the form of BTC, ETH & USD coin.
The Celsius creditors above $5,000 claim also have the option to reduce their claim to $5,000 and go with this plan. Celsius creditors will also receive ownership in NewCo through equity and management share tokens.
Failed Crypto lender company also confirmed that the new company will be a public company and also 100% ownership of the company will remain in the hands of the Celsius creditors. The team also will register the company with the United States Securities and Exchange Commission (SEC). In short, all the financial activities of the new company will fully comply with the regulation system.
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