Celsius Network is all set for bankruptcy exit.
Celsius, which was once one of the world’s largest crypto lenders, filed for bankruptcy protection in mid-July 2022. At the time, Celsius mentioned it had anywhere between $1 billion and $10 billion in assets and liabilities and more than 100,000 creditors. Prior to filing for bankruptcy, Celsius froze withdrawals for customers in June, citing “extreme market conditions.” That freeze was never lifted.
Bankrupt crypto lender Celsius Network has chosen NovaWulf Digital Management as the sponsor for its proposed Chapter restructuring plan, which will see the investment advisory firm take over the operations of a new company and most customers estimated to recover up to 70% of their funds. Celsius presented the plan on Feb. 15 in a filing to the United States Bankruptcy Court for the Southern District of New York. The proposed deal with NovaWulf should allow Celsius to start returning crypto assets to customers in June, Celsius attorney Ross Kwasteniet said at Wednesday’s hearing in Manhattan. The proposed plan has the support of the Celsius Official Committee of Unsecured Creditors (UCC)-a body representing the interests of Celsius account holders.
Celsius selected NovaWulf’s bid out of more than 130 proposals received, saying that NovaWulf was the only finalist that intended to maintain long-term control over Celsius’ harder-to-liquidate assets, like its loan portfolio and bitcoin mining business. NovaWulf has agreed to pay up to $55 million to the reorganized company, called “NewCo” by Celsius, which will be owned by Celsius creditors . NovaWulf will share in the new business’ profit, Kwasteniet said.
New subsidiary company-” Newco” owned by Celsius and Celsius creditors.
NovaWulf has agreed to pay up to $55 million to the reorganized company, called “NewCo” and will continue Celsius’ bitcoin mining and loan businesses. NovaWulf will own shares in the new business’ profit, Kwasteniet said. The new company would also pursue litigation stemming from Celsius’ collapse, including claims against former CEO Alex Mashinsky and other insiders.
Under the plan, Celsius customers with less than $5,000 in their accounts will be eligible to receive a one-time payment in bitcoin, Etherium or the stablecoin USDC, according to court documents filed on Wednesday. Celsius estimates that option will be available to more than 85% of its customers, providing them with about 70% of the value of their deposits. Celsius customers with more than $5,000 in their accounts would receive payments from crypto that is left over after smaller customer accounts have been paid back, and will additionally receive ownership shares in the new company.
