On Monday, August 14th, the bankrupt crypto lending institution Celsius Networks obtained court permission to conduct a survey among account holders regarding a proposed repayment of approximately $2 billion in Bitcoin (BTC) and Ethereum (ETH) through a new company owned by the users.
US Bankruptcy Judge Martin Glenn stated that he would begin sending out ballots to Celsius account holders and that the voting materials included clear explanations of the company’s repayment plans.
Celsius Networks’ Repayment Plan
Judge Glenn stated that he would approve Celsius’ consultants to provide additional information on the volatility of the crypto industry. He also questioned any challenges that could affect the company’s crypto mining operations. Interestingly, while some creditors have already objected to the repayment plans, other customers have objected to these objections.
The bankrupt crypto lending institution has put forth a repayment plan led by investment firm Arrington Capital. A consortium called Fahrenheit LLC, which successfully acquired the assets of the crypto lender through a bankruptcy auction earlier this year, is leading the offer.
Customers will receive partial repayment through ownership in the new organization, which will manage Celsius’ mining operations and assume responsibilities such as corporate loans and investments, including $500 million worth of liquid cryptocurrency. The new company will have strong financial backing and no significant debt, making it the first publicly traded firm with substantial assets in both Bitcoin and Ethereum. The plan also includes the distribution of approximately $2 billion worth of crypto tokens to creditors.
According to court documents, a committee representing Celsius account holders and other creditors stated that retail debtors could recover more than 85 cents per dollar if the Fahrenheit agreement is finalized. The new company will have strong financial backing and no significant debt, making it the first publicly traded firm with substantial assets in both Bitcoin and Ethereum. The plan also includes the distribution of approximately $2 billion worth of crypto tokens to creditors.
Celsius’ attorney, Chris Koenig, stated that the company is progressing towards starting repayments to customers by the end of 2023. However, Judge Glenn also noted that there is still much work pending in this case.
Celsius Creditors Voice Their Objections
According to Bloomberg, Celsius account holders expressed their dissatisfaction with the company’s repayment strategy during a hearing. They are hesitant to invest in a new and uncertain project. Several customers also want Celsius to return their CEL tokens. They disagree with the idea of each CEL token being valued at 25 cents.
However, Judge Glenn stated that Celsius account holders would not receive their CEL tokens. The Securities and Exchange Commission claimed that Celsius and its former CEO considered the CEL tokens to be similar to shares in a publicly traded company. Typically, these shares lose value in a Chapter 11 bankruptcy situation.
Judge Glenn explained that CEL tokens cannot be issued because they are dependent on Celsius’ value. He also added that Celsius would no longer exist after the conclusion of the Chapter 11 bankruptcy case. Last month, federal prosecutors charged Celsius CEO Alex Mashinsky with fraud, accusing him of manipulating and artificially inflating the value of CEL.
Will love too start the project but am broke too afford