Celsius Creditors Vote in Favor of Crypto Repayment and Equity Distribution Plan
Creditors in the Celsius bankruptcy case have voted in favor of a comprehensive plan, paving the way for the return of funds and the equitable distribution of assets through the establishment of a new entity.
As per September 25th filing by the bankruptcy firm Stretto, the majority of creditor classes rallied behind the proposal, registering approval rates surpassing 98 percent.
However, while the consensus among creditors appears nearly unanimous, the plan still requires the ultimate seal of approval.
Creditors Await Court’s Decision
The United States Bankruptcy Court for the Southern District of New York is slated to convene a confirmation hearing on October 2nd to determine the plan’s fate, marking a pivotal juncture in this complex legal saga.
As previously disclosed in an August 17th filing, the blueprint currently under consideration entails the restitution of approximately $2 billion worth of Bitcoin and Ethereum to the creditors of the beleaguered Celsius Network.
Beyond the straightforward reimbursement, the plan charts a new course by allocating equity in a fresh enterprise temporarily referred to as “NewCo.”
The prospective role of NewCo is poised to be a multifaceted one. It is envisaged that NewCo will take charge of and expand upon the Debtors’ Bitcoin mining endeavors, engage in Ethereum staking, exploit other less liquid assets, and forge innovative, regulatory-compliant business ventures, as articulated in the disclosure statement.
The management of NewCo will be overseen by Fahrenheit Group, a consortium comprising distinguished crypto-centric figures and organizations.
The Celsius Network, once a formidable player in the crypto lending sphere, found itself ensnared in the tumultuous events of the 2022 bear market. The company’s descent culminated in a bankruptcy filing on July 14, 2022, that sent shockwaves through the crypto community.
Celsius Founder Faces Litany of Charges
Earlier, the Securities and Exchange Commission (SEC) filed a lawsuit against Celsius and its former CEO, Alex Mashinsky, on July 13, 2023.
The allegations against the company and its leader revolved around purportedly fraudulent and unregistered sales of “crypto asset securities,” accompanied by allegations of financial misrepresentation and market manipulation.
Mashinsky was taken into custody on the same day, facing a litany of charges related to fraudulent financial activities and the misleading of investors.