Creditors participating in the Celsius bankruptcy case have overwhelmingly endorsed a proposed plan that entails the return of funds to them and the allocation of equity in a newly established entity.
As outlined in a filing dated September 25 by bankruptcy firm Stretto, the majority of creditor classes resoundingly approved the plan, with support exceeding 98%.
Despite this near-unanimous consensus, the plan still awaits final confirmation during a hearing scheduled for October 2 in the United States Bankruptcy Court for the Southern District of New York.
Based on a disclosure statement submitted on August 17, the current plan entails the redistribution of approximately $2 billion worth of Bitcoin (BTC) and Ether (ETH) to Celsius Network creditors. Furthermore, the plan includes the distribution of equity in a newly formed company provisionally referred to as “NewCo.”
“NewCo” is poised to manage and expand the Debtors’ Bitcoin mining activities, stake Ethereum, monetize other illiquid assets held by the Debtors, and cultivate novel, value-enhancing, and regulatory-compliant business ventures, according to the disclosure.
Notably, the governance of the newly established company will be entrusted to the Fahrenheit Group, a consortium comprising cryptocurrency-native individuals and organizations, including former Algorand CEO Steven Kokinos, venture capital firm Arrington Capital, crypto mining entity US Bitcoin Corp, Proof Group Capital Management, and Arrington Capital advisor Ravi Kaza.
Celsius Network suffered a significant setback during the 2022 bear market, culminating in the crypto lender’s bankruptcy filing on July 14, 2022.
On July 13, 2023, the Securities and Exchange Commission (SEC) initiated legal action against Celsius and its former CEO, Alex Mashinsky, alleging the unlawful raising of billions of dollars through unregistered and deceptive offerings related to “crypto asset securities.”
On the same day, Mashinsky was arrested following an indictment by the U.S. Department of Justice, which charged the former CEO with fraudulent financial activities, misleading investors, and various related offenses.