Bankrupt crypto lending firm Celsius has filed an intent to retrieve funds from those who withdrew $100,000 or more in the three-month period leading up to the firm’s bankruptcy filing.
Celsius Takes Stance
Celsius, the crypto lender that filed for bankruptcy in 2022, is considering a bold move in an attempt to recoup funds from creditors who made significant withdrawals just before the bankruptcy declaration. The company is eyeing customers who borrowed more than $100,000 within the three months leading up to the bankruptcy on July 13, 2022.
Celsius officially filed its intent on January 9, signaling its move to address the withdrawals made by creditors. The company may ask those with 'withdrawal preference exposure' exceeding $100,000 to return a portion of those funds. If these customers decline, Celsius is prepared to initiate legal proceedings against them.
Legal Action For Non-Compliance
In the filing, Celsius outlines a potential resolution for affected account holders. Those with 'withdrawal preference exposure' over $100,000, who did not reject the reorganization plan, are not excluded parties, and did not opt out of releases, have the option to settle their liability. To do so, they must pay 27.5% of the funds by January 31, 2024.
Creditors interested in settling must act promptly. The deadline for submitting the election form indicating the intent to make the settlement payment is January 25. Those who opt for settlement will receive a release of all avoidance actions and distributions under the reorganization plan. Failure to settle by the deadline may lead to legal consequences.
Creditors who do not settle by January 31, 2024, face potential repercussions. The Litigation Administrator will step in after the Effective Date to address any unresolved 'Withdrawal Preference Exposure.' Non-compliant creditors may be subject to separate correspondence or legal action to recover the preferences they received.
Celsius' Bankruptcy and Restructuring
Celsius filed for bankruptcy in 2022, citing a $1.2 billion deficit in its balance sheet and suspending customer withdrawals. The restructuring plan, approved by Judge Martin Glenn, involves repaying customers using crypto assets and shares in a newly publicly listed Bitcoin mining company."
Post-bankruptcy, the crypto lending firm is taking strategic steps to honor its commitments. The company is actively unstaking and withdrawing Ethereum, gearing up for what it terms 'timely distributions to creditors.'
Nansen, a blockchain analytics firm, reports that Celsius currently comprises 20.3% of the withdrawal queue, with 112,037 Ether valued at approximately $266 million.
In this critical phase of its restructuring, Celsius is setting a precedent by seeking to reclaim funds from creditors, signaling a tough stance on financial accountability.
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.
