Celsius Network Gets Court Approval for New Bitcoin Mining-Centric Bankruptcy Exit Strategy
Summary:
Celsius Network has received court approval to pursue an additional bankruptcy exit strategy, breaking away from the original agreement with the Fahrenheit consortium. The U.S. Securities and Exchange Commission's refusal to allow the creation of NewCo prompted this move. Instead, a public enterprise solely for Bitcoin mining will be established. Under the new plan, $225 million in cryptocurrency assets will be released and about $2 billion in Bitcoin and Ether are to be distributed to the Celsius creditors. Despite some creditors pushing for a new vote on the proposal, the court approved the restructuring strategy, concluding it would not negatively impact creditors.
Celsius Network has received authorization to implement an additional exit strategy from bankruptcy, diverging from their original agreement with the Fahrenheit consortium to establish a dedicated Bitcoin mining firm. This update is according to legal documents submitted on December 27, with Judge Martin Glenn greenlighting the process which involves setting up a public enterprise exclusively for Bitcoin mining. This initiative deviates from the initially intended multi-faceted company overseen by the Fahrenheit consortium.
The switch was prompted by the U.S. Securities and Exchange Commission's (SEC) refusal to accord the necessary exemptions needed to implement the first alternative in the bankruptcy exit blueprint entailing the birth of NewCo. This initial plan purposed NewCo to augment Celsius' extant mining operations and corporate activities. It was to be supervised by the Fahrenheit consortium, incorporating numerous crypto-centric entities and persons such as Proof Group, Arrington Capital and Hut 8. According to the document: "As the SEC declined to grant the requisite exemptions for the NewCo Transaction, the Debtors, backed by the Committee, have opted for the second path approved by the creditors – the Orderly Wind Down."
Under this newly approved scheme, creditors would recoup part of their losses via shares in the forthcoming Bitcoin mining corporation. Additionally, it would liberate $225 million in cryptocurrency assets originally slated to fund the new enterprises rejected by the SEC. In alignment with the earlier ratified plan, roughly $2 billion in Bitcoin (BTC) and Ether (ETH) are to be reallocated to the Celsius creditors.
Certain creditors, along with the bankruptcy monitor of the U.S. Department of Justice, argue that Celsius should subject the proposal to a fresh round of voting, as per a Reuters' report. However, Judge Glenn determined that the new restructuring strategy would not detrimentally impact the creditors. Therefore, he concluded that the Wind-Down Motion was approved.
Celsius represents a fraction of the crypto lenders that ran aground in 2022, having filed for bankruptcy in July. Its previous CEO, Alex Mashinsky, was apprehended in July 2023 on allegations of securities fraud, commodities fraud and wire fraud.
Published At
12/28/2023 11:11:21 PM
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