Bankrupt cryptocurrency lender, Celsius, has submitted an updated bankruptcy filing and is court seeking clearance for its reorganization plan from a bankruptcy court in New York.
Celsius will be selling all altcoins from all customers (except Custody and Withhold accounts) starting July 1st and will be converting them into Bitcoin and Ethereum.
— Celsians (@CelsiansNetwork) June 15, 2023
As part of its revised reorganization plan, Celsius intends to initiate the liquidation of all altcoins held by its customers, excluding Custody and Withhold accounts, starting from July 1, 2023. The liquidated altcoins will be exchanged for Bitcoin and Ether.
Celsius also introduced the concept of “Set Off Treatment” to handle “Retail Borrow Claims.” The concept involves offsetting losses and gains within a specific year. Any losses not utilized against income in the current year can be carried forward and applied to income in subsequent years.
However, Celsius may face objections to its restructuring proposal from some borrowers. David Adler from the law firm McCarter & English pointed out in a tweet that while Celsius Lending insists on loan repayment, it does not appear to be fulfilling its obligation of releasing collateral to borrowers. Adler suggested that this proposed treatment may violate consumer loan legislation at the state and federal levels, potentially leading to borrower objections or protests.
Under the Plan, the Debtors have elected to treat the Retail Borrow Claims through the Set Off Treatment. See pics below. Although the Debtors are demanding repayment of the loans (ie demanding performance by the Borrowers), the Debtors have no intention whatsoever of… pic.twitter.com/MD5rGWnsU3
— David Adler (@DavidJAdler1991) June 15, 2023
In addition to the bankruptcy proceedings in the United States, Celsius is also seeking approval to appoint Chris Ferraro as the foreign representative for the United Kingdom in compliance with the English Court’s Cross Border Insolvency Regulations (CBIR). This step aims to safeguard the company’s assets in the UK and facilitate a coordinated global resolution of the insolvency proceedings by recognizing the Chapter 11 filing as the “foreign main proceedings.”
The filing represents a significant milestone in Celsius’s restructuring efforts following its acquisition by the Fahrenheit consortium. The consortium was reported on May 25, 2023, to have succeeded in its bid to acquire Celsius assets.
The estimated value of Celsius’s assets at the time was approximately $2 billion. Under the new agreement, the newly formed business entity will receive a liquid bitcoin value ranging from $450 to $500 million. Additionally, US Bitcoin Corp., a member of the consortium, will undertake the construction of a 100-megawatt Bitcoin mining facility, showcasing its commitment to the future of cryptocurrency mining.
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