Creditors offered overwhelming support to Celsius Network’s reorganization plan, pending ultimate consent from the United States Bankruptcy Court.
More than 98% of Celsius’s creditor groups have backed the suggested reorganization plan, which will bring back between 67 and 85% of their investment. In addition, a voting declaration filed on September 25 by Stretto, a restructuring agency, shows that the creditors will acquire equity in a newly created entity, provisionally referred to as ‘NewCo.’
Creditors Disregard Opposition to Celsius Network’s Restructuring Plan
The reorganization plan’s approval happened despite protests by the United States Trustee. This is a Department of Justice (DoJ)-backed entity that oversees the administration of insolvency cases as well as private trustees associated with the cases.
The ultimate approval of the plan’s execution still awaits confirmation from the United States Bankruptcy Court in New York’s Southern District. An October 2 hearing concerning the same has already been scheduled. The suggested plan is explained in documents revealed on August 17 and gives comprehensive details concerning the distribution of Bitcoin and Ethereum worth an estimated $2B to the creditors of Celsius Network.
NewCo to Optimize Celsius’ Mining Activities
‘NewCo’ is envisaged as a platform that will improve Celsius’ present Bitcoin mining activities, hold stakes in Ethereum, and wind up the additional assets of debtors linked to insolvency proceedings. In addition, the platform will explore additional business opportunities while complying with regulatory requirements.
The management team from the Fahrenheit Group will oversee ‘NewCo.’ In May 2023, the firm won a bid to acquire Celsius Network.
Supported by US Bitcoin Corp, a Bitcoin mining firm, Proof Group Capital Management and Arrington Capital, and ex-Algorand CEO Steven Kokinos, Fahrenheit Group will supply the required management team, capital, and technology to develop and run a new public entity. In turn, this will ensure adherence to applicable guidelines.
Is Celsius’ Marching Out of Insolvency?
At one point, Celsius Network held a leading position in the international digital asset landscape. As of 2021, it managed an astounding $25B in assets. The company permitted users to deposit different digital assets, including Ethereum and Bitcoin, to acquire interest and use cryptocurrencies as securities for loans.
Last year, during a slump in the crypto market, Celsius filed for insolvency. In July, Alex Mashinsky, the firm’s ex-CEO, was apprehended, and this was precisely one year after the firm’s collapse. Afterward, he was released on bail after agreeing to a personal recognizance bond of $40M.
Creditors Support for Restructuring Plan Timely in Celsius Networks’ March from Insolvency
The creditors’ resounding support is a significant step forward in the insolvency proceedings involving Celsius Network. In this case, it possibly creates an opportunity for an organized and reasonable resolution that will be advantageous to all stakeholders.
Nevertheless, news regarding Celsius creditors supporting the planned restructuring strategy comes immediately after the United States Securities and Exchange Commission (SEC) objected to the insolvent firm’s intention to utilize Coinbase as a distribution agent for global clients.
Earlier this year, Coinbase was sued by the SEC. As such, there is the belief that the intention to utilize the exchange service might ‘impact most of the concerns indicated in the lawsuit.
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