As it seeks final court permission for its restructuring plan, Celsius Network, the troubled cryptocurrency lending platform, has stated its intention to start paying back consumers before the end of 2023. The initiative is a key step toward overcoming the issues that the corporation encountered after suspending withdrawals in June 2022 due to the Terra ecosystem’s collapse.
Christopher Koenig, the legal representative for Celsius Network, described the company’s ambitions during a confirmation hearing on October 2 in New York. He disclosed that a new company called “NewCo” would be formed as a result of the reorganization process, receiving a sizeable $450 million in startup money. The company will be able to honor its promise to pay its clients thanks to this financial support.
#Celsius will distribute at least $2.03B of crypto to Creditors.
— Celsius NewCo Community (@CelsiusNewCo) October 2, 2023
Meanwhile, NewCo will be seeded with up to $450 million in crypto.
A filing dated September 29 provided insights into Celsius’s repayment strategy. The plan involves utilizing $2.03 billion in Bitcoin, Ether, and stock in the newly formed company to partially satisfy its creditors. NewCo has garnered support from a consortium of companies known as Fahrenheit LLC, which will oversee the mining and staking business operations.
The court proceedings, presided over by Judge Martin Glenn, will determine whether Celsius’s restructuring plan receives approval. Additionally, regulatory clearance will be required for the plan to proceed. While the plan has garnered significant support, with over 95% of voting account holders expressing approval in terms of both quantity and dollar value, certain creditors have raised objections, as reported.
If the court approves Celsius’s plan, it would mark one of the first instances in which a failed cryptocurrency platform from 2022 is resurrected through a Chapter 11 bankruptcy case. This development could provide hope for Celsius customers who have been awaiting the restoration of their assets for more than a year.
Celsius Network’s path to restructuring and repayment highlights the challenges and complexities that can arise within the cryptocurrency industry. It underscores the importance of regulatory compliance and financial stability for cryptocurrency platforms to ensure the security and trust of their users.
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