Crypto lender Celsius Network has submitted a request to a New York court for final approval of its restructuring plan, signaling its intent to start repaying creditors before the end of 2023. The company’s legal counsel, Christopher Koenig, presented this plan during an October 2 hearing.
Celsius Network, facing significant challenges, has outlined its strategy to embark on a path towards financial recovery and redemption. Under the restructuring plan, a new entity called “NewCo” is set to emerge with an initial infusion of $450 million in seed funding.
A filing reveals that Celsius intends to make partial repayments to its creditors utilizing $2.03 billion worth of Bitcoin. The fate of this ambitious plan now rests in the hands of the presiding judge, Martin Glenn, who is tasked with evaluating the proposal’s feasibility. Furthermore, regulatory approval will be necessary before any implementation can take place.
Despite receiving resounding support from the majority of stakeholders, with over 95% of voting account holders in favor both in terms of numbers and monetary value, some creditors have contested the plan. Celsius Network, however, remains steadfast in its pursuit of a successful restructuring.
Celsius potential comeback
Should the court and regulatory authorities approve Celsius Network’s plan, it would mark a significant milestone in the crypto industry. This resurrection of a once-failed crypto platform through Chapter 11 bankruptcy proceedings could serve as a precedent for other distressed companies in the sector.
The crypto platform customers have endured a prolonged period of uncertainty, beginning with the suspension of withdrawals in June 2022 following the collapse of the Terra ecosystem. The looming prospect of repayment by the end of 2023 offers a glimmer of hope to these customers who have patiently awaited resolution.
The restructuring plan submitted by Celsius Network faces several hurdles, including the scrutiny of creditors who remain dissatisfied with the proposed terms. Their objections have added a layer of complexity to an already intricate process.
Additionally, regulatory authorities must carefully assess the plan to ensure that it complies with existing financial regulations and does not pose any systemic risks to the crypto market. The outcome of this evaluation will significantly impact the future of Celsius Network and could set a precedent for regulatory responses to similar cases in the future.
For Celsius customers who have been grappling with the uncertainty surrounding their assets, the prospect of repayment by the end of 2023 is a promising development. While challenges remain, including creditor objections and regulatory scrutiny, the company’s commitment to resolving its financial woes is a step in the right direction.
