Celsius Creditors to Vote on Bankruptcy-Escape Plan After Judicial Approval

Creditors are being given a month to carefully consider the proposed sale to the Fahrenheit consortium, with indications from court documents suggesting a potential recovery of 67% to 85% of their holdings.

Celsius, a cryptocurrency lending platform that has undergone bankruptcy proceedings, is now preparing to conduct a voting process regarding its asset sale to the Fahrenheit consortium. This significant step follows the approval of disclosures by a judge, hinting that creditors may expect a recovery range of 67% to 85% of their holdings.

This approval serves as a pivotal moment in Celsius' year-long journey towards financial recovery and the restitution of funds to its customers. This period has been characterized by considerable turmoil within the cryptocurrency markets, coupled with the apprehension of the former CEO, Alex Mashinsky, on charges of fraud, which he vehemently denies.

Guiding the company through this phase is Chris Ferraro, who has assumed the role of interim CEO. Ferraro emphasized the company's unwavering dedication to achieving the most favorable outcomes for both customers and creditors, focusing on the swift reinstatement of value. This ongoing effort adheres to the guidelines of Chapter 11, initiated in July 2022 and overseen by New York Bankruptcy Judge Martin Glenn.

Creditors will soon receive voting ballots to cast their decisions on the proposed plan, which entails the divestiture of assets to a consortium comprising Arrington Capital and the mining entity U.S. Bitcoin Corp. The voting window spans from August 24 to September 22. Potential returns for creditors, predominantly denominated in Bitcoin (BTC) and Ethereum (ETH), could span from 67% for holders of Earn Accounts to as high as 85.6% for participants in Celsius’ Borrow Program. This compares favorably to the mere 47% anticipated from a liquidation of assets, as indicated in court submissions.

The landscape of crypto-related bankruptcies has witnessed substantial support from creditors for restructuring blueprints in other instances as well. Notably, Voyager, another crypto lending institution, saw a resounding 97% of creditors aligning with a sale to Binance.US. However, this arrangement was thwarted by unforeseen legal setbacks, prompting the buyer to withdraw.

In a parallel development, Alex Mashinsky, the former CEO, faced legal entanglements in July. Charges encompassed securities fraud, commodities fraud, wire fraud, and conspiracy charges, all related to the alleged manipulation of Celsius' native token, CEL. It's noteworthy that while the company itself escaped prosecution by taking responsibility and cooperating, it remains unaffected by a substantial $4.7 billion fine levied by the Federal Trade Commission. This hefty penalty is unlikely to impede the company's commitment to reimbursing funds to its clientele.