Crypto lender Celsius Network is trying to secure court approval for its restructuring plan, to commence customer repayments before the close of 2023. During an October 2nd hearing in New York, the company’s legal counsel, Christopher Koenig, presented the plan.
“NewCo” Emerges with Substantial Seed Funding
As part of the proposed restructuring, Celsius intends to establish a new entity referred to as “NewCo,” which will emerge from the proceedings with a significant infusion of $450 million in seed funding. This capital injection is poised to set the stage for the repayment process.
Celsius Network’s plan involves partial repayments to creditors, primarily using a combination of $2.03 billion in Bitcoin and Ethereum, along with equity shares in the freshly formed company. The restructuring also outlines a pivotal role for NewCo, supported by a consortium named Fahrenheit LLC, which will oversee mining and staking operations.
Judicial Review and Regulatory Clearance
The fate of Celsius Network’s restructuring plan rests with Judge Martin Glenn, who presides over the case. Judge Glenn is currently evaluating the proposal, which will also require approval from regulatory authorities. While the plan garnered substantial support from the majority of creditors, some are reportedly challenging its validity.
Celsius plan highlights. Source: stretto.com
Celsius Network underscored its broad support within the crypto lending community, stating that “the Plan has the support of over 95% of voting Account Holders by both number and dollar amount.” If approved, this would mark one of the first instances in 2022 of a failed crypto platform being revived through a Chapter 11 bankruptcy proceeding.
Customer Wait for Resolution
Celsius customers have endured a prolonged wait for resolution since the suspension of withdrawals in June 2022, triggered by the collapse of the Terra/Luna ecosystem. The restructuring plan’s approval would represent a significant step toward addressing customer concerns and delivering on repayment promises.
