Celsius Creditors Poised to Vote on Bankruptcy Exit Strategy Post Judicial Greenlight

Celsius Creditors Set to Decide on Escape Plan from Bankruptcy After Court Approval Following judicial authorization, creditors are preparing to cast their votes regarding Celsius, the bankrupt crypto lending entity’s, proposal to sell its assets to the Fahrenheit consortium. The court’s endorsement comes after disclosures indicating that creditors might regain between 67% and 85% of their holdings.

This approval stands as the last significant milestone in Celsius’ year-long journey to emerge from bankruptcy, aiming to refund its clients. This period has unfolded amidst considerable turmoil within the cryptocurrency markets, alongside the apprehension of former CEO Alex Mashinsky on fraud allegations, which he has vehemently refuted.

Interim CEO Chris Ferraro, now leading the company, expressed via email that their primary focus remains on securing the most favorable outcome for customers and creditors, while promptly delivering value. This effort falls under the aegis of Chapter 11 proceedings that initiated in July 2022, overseen by New York Bankruptcy Judge Martin Glenn.

Between August 24 and September 22, creditors will receive ballots to cast their votes on the proposed plan. This plan involves selling assets to a consortium comprising Arrington Capital and miner U.S. Bitcoin Corp. The expected returns for creditors, primarily dispensed in bitcoin (BTC) and ether (ETH), may span from 67% for Earn Account holders to 85.6% for participants in Celsius’ Borrow Program. In contrast, a simple asset liquidation would yield just 47%, as per court documents.

Past instances of cryptocurrency bankruptcy have often seen creditors overwhelmingly support restructuring plans. For instance, in the case of Voyager, a crypto lending service, around 97% of creditors favored a sale to Binance.US. However, the buyer subsequently withdrew due to legal delays.

In July, Alex Mashinsky was apprehended on charges of securities fraud, commodities fraud, wire fraud, and conspiracy to manipulate the price of Celsius’ CEL token. Various government agencies brought forth these charges. The company itself avoided prosecution by acknowledging responsibility and cooperating. Despite a $4.7 billion fine imposed by the Federal Trade Commission, the company maintains its commitment to refunding customers as planned.



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