The crypto lender has proposed converting all its altcoin holdings into Bitcoin and Ethereum to quell growing regulatory concerns and maximize the value of its assets.
Defunct crypto lender Celsius has revised its bankruptcy filing awaiting approval from a bankruptcy court in New York after a successful acquisition deal with Fahrenheit. The crypto lender filed its reorganization plan on June 15.
Under the revised plan Celsius will be selling all altcoins from all customers except Custody and Withhold accounts and converting them into Bitcoin (BTC) and Ether (ETH), starting from July 1.
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
The new reorganization plan proposes to treat the “Retail Borrow Claims” through the “Set Off Treatment.” The term "set off" refers to the comparison of losses against profits in a given year. Losses that are not offset against income can be carried over and offset against income in later years.
David Adler from McCarter & English law firm tweeted that the restructuring proposal by Celsius could face opposition from the borrowers. He noted that the debtor (Celsius Lending) is demanding a repayment of the loans yet has no intention of fulfilling its contractual obligations such as returning the collateral to the borrowers. This could be something borrowers would object to, he added.
“This proposed ‘treatment’ violates every consumer lending law out there (state, federal) and the ad hoc Borrower group will be opposing this plan."
Additionally, Celsius has asked for permission to appoint Chris Ferraro as the foreign representative in connection with the English Court's Cross Border Insolvency Regulations (CBIR) for the United Kingdom. In this way, the company's assets in the UK would be safeguarded, and the United States Chapter 11 would be acknowledged as the "foreign main proceedings" in order to organize a global resolution.
Related: Celsius adds over 428K stETH to Lido’s lengthening withdrawal queue
Fahrenheit consortium, which comprises venture capital firm Arrington Capital and miner US Bitcoin Corp, won the bid to acquire Celsius assets on May 25. At the time Celsius assets were estimated to be about $2 billion in value. Under the new deal, the new company is expected to receive about $450- $500 million worth of liquid cryptocurrency, while US Bitcoin Corp plans to construct a 100-megawatt Bitcoin mining plant.
Celsius paused withdrawals on June 13, 2022 after the firm got entangled in bad investments and crypto contagion.
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