Bankrupt crypto lender Celsius received permission to seek creditor approval for its proposed bankruptcy plan.
According to reports by Bloomberg and Reuters, bankrupt cryptocurrency lender Celsius Network was granted permission by a US bankruptcy judge to send its proposed bankruptcy plan to its creditors. Celsius’ proposed strategy will see it exit Chapter 11 bankruptcy as an entity its creditors own.
Creditors Have Sufficient Information to Vote on Bankruptcy Plan
On Monday, during a US Bankruptcy Court hearing in Manhattan, Judge Martin Glenn approved Celsius’s disclosure agreement and solicitation material, noting the firm had provided creditors with enough information to vote on its bankruptcy proposal.
Celsius filed for Chapter 11 bankruptcy in 2022, leaving customers with uncertainty over the outcome of their funds. The firm reached two settlements in July which will allow the lender to exit bankruptcy proceedings and return customer assets. In addition to its proposed bankruptcy plan, a confirmation hearing is scheduled for October to deal with Celsius’ reorganization plan. If all goes well, customers may see disbursements of their assets before the end of the year.
When Celsius filed for bankruptcy, it had 600,000 customers who invested around $4.4 billion in interest-bearing Celsius accounts.
Fahrenheit Group to Take Control of Remaining Business Lines
Under Celsius’ bankruptcy plan, retail customers will receive some crypto deposits, and the Fahrenheit Group will take over the lender remaining business line, including bitcoin mining and staking. The Fahrenheit consortium recently won the bid to acquire Celsius.
The lender suggests that most of its customers with interest-bearing Earn accounts will receive a 67% recovery. The recovery will consist of the return of liquid crypto assets such as Bitcoin and Ether, equity shares in the new entity, and proceeds from the litigation against Celsius’ founder Alex Mashinsky and other executives.
Mashinsky was arrested and sued by US regulators and charged with seven counts of securities, commodities, and wire fraud, as well as a conspiracy charge to manipulate the lender’s native token, $CEL.
During an appearance in federal court, Mashinsky pleaded not guilty to the charges against him.
The lender’s creditors have until September 20 to submit votes on the proposal.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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