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Bankrupt Crypto Lender Celsius Network Pursues New Buyer Despite Existing Offer – What’s Going On?

Ruholamin Haqshanas
Last updated: | 2 min read
Source: AdobeStock / Rafael Henrique

The bankrupt cryptocurrency lender, Celsius Network, is reportedly pursuing more bids and exploring new buyers despite having an offer on the table. 

During a bankruptcy court hearing in Manhattan, Celsius attorney Chris Koenig said the company remains open to better offers, per a report by Reuters. He added that the lender’s official unsecured creditors committee (UCC) met with a potential buyer just days ago to review an alternate proposal.

The crypto lender also asked judge Martin Glenn, who is overseeing Celsius’ Chapter 11 bankruptcy proceedings, to extend the time limit for submitting a bankruptcy restructuring plan built around the NovaWulf deal. The judge agreed to give Celsius an extra three weeks.

As reported, in mid-February, NovaWulf Digital Management reached a deal with Celsius to buy its lending operations and help bring an end to its bankruptcy case. Debtors of Celsius Network presented the sale plan to the U.S. Bankruptcy Court of the Southern District of New York. 

The plan, which proposes a deal with NovaWulf that would allow the crypto lender to begin returning crypto assets to customers in June, has the support of the firm’s creditors committee and is part of the overall reorganization plan for the company’s retail platform and mining business.

As part of the plan, a “convenience class” of creditors, those with claims less than $5,000 related to Celsius Earn Accounts, will receive 70% recovery of their funds in the form of a one-time payment in Bitcoin, Ethereum or the stablecoin USDC.

On the other hand, Celsius customers owed more than $5,000 will be allowed to reduce their claim to that amount to join the class, and creditors owed at least $1,000 can opt out of the class and receive a portion of yet-to-be-determined funds recovered for general Earn participants.

If Celsius chooses an alternate bidder, it intends to offer NovaWulf up to $20 million in breakup fees, the report said. 

Celsius filed for Chapter 11 bankruptcy in July last year in an effort to restructure and stabilize its business and maximize value for all its stakeholders.

Celsius Allocates $25M for Withdrawals

As per the latest development in the Celsius bankruptcy operations, the crypto lender has established a wallet with $25 million of digital assets for its custodial account holders to withdraw. The funds include $10.39 million of USDC, $8.8 million of ETH, and another $6 million of various digital assets. 

By Wednesday, custody account holders had withdrawn $17.7 million of these cryptocurrencies, Celsius interim Chief Executive Chris Ferraro said in a court hearing, noting that another $3.5 million of withdrawals are in process. That represents 60% of eligible custody users and 80% by crypto value, he said.

Earlier this month, Celsius said that it has opened withdrawals for select custodial account holders with certain limitations after securing approval from the U.S. bankruptcy court. Celsius was authorized to distribute 94% of each eligible user’s custody assets, according to a court document.