Defunct crypto lender Celsius Network has been cleared by the court to go ahead with its bankruptcy restructuring plans.
Celsius Network to Activate Repayment Plan
Precisely, Celsius Network has won the United States bankruptcy court’s approval to transition into a creditor-owned Bitcoin (BTC) mining firm. This is all part of the big picture which involves repaying customers who had their assets frozen when the firm was faced with a liquidity crisis over a year ago.
Judge Martin Glenn of the New York bankruptcy court mentioned his plans to confirm that the embattled crypto firm will repay affected customers in a combination of crypto assets and stock in the new creditor-owned Bitcoin mining firm. According to Celsius’ legal team, the distribution of assets to customers is likely to commence early next year.
The latest development is a significant milestone for Celsius Network after a very tumultuous year which contributed to its bankruptcy.
The Roller Coaster Ride With Original Plan
Celsius has been seeking a restructuring plan that is centered on its customers and at a time, the firm proposed repayment of an estimated $2 billion in Bitcoin and Ethereum (ETH) under the leadership of investment firm Arrington Capital. This was after Fahrenheit LLC successfully acquired Celsius’ assets through a bankruptcy auction that was held earlier in the year.
Based on the proposal, customers were meant to receive partial repayment by giving them a share in the new company which would be charged with managing the crypto lender’s mining activities. Unfortunately, these customers expressed their displeasure over the repayment proposal. They were concerned about owning shares in a new project whose integrity is yet to be proved.
Later in September, Celsius Network creditors voted in favor of the restructuring plan which involved the new entity NewCo. Markedly, the restructuring proposal received 98% Yes in its favor, pushing Celsius to move on to seek approval from the court.
On the other hand, former Celsius Network CEO Alex Mashinsky who was charged with defrauding the company’s customers is set to appear in court next year as his criminal trial is scheduled for September 17th, 2024. Mashinsky and Roni Cohen-Pavon, the company’s former Chief Revenue Officer were both accused of lying to customers about the financial status of the firm.
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