Celsius’ Proposed Extension for Restructuring Opposed by Creditors, US Government
Plans to transform the bankrupt crypto lender into a “recovery corporation” are not a done deal, and the estate could still be liquidated, legal filings warn.
Plans by bankrupt crypto lender Celsius Network to extend its restructuring plan by up to five months have been opposed by creditors and the U.S. government in legal filings made Wednesday.
While the company on Jan. 25 outlined plans to transform into a publicly traded "recovery corporation," it needs to hurry up to avoid mounting lawyers’ fees from draining the estate dry, the filings said.
“These cases must proceed towards a resolution,” a filing on behalf of Celsius’ unsecured creditors said, adding that in the eight months since the company halted withdrawals “many account holders’ lives and finances have been upended because of the past conduct of the Debtors and certain of their former directors and officers.”
U.S. bankruptcy law grants a defunct company the exclusive right to offer up a reorganization plan for a limited period of normally four months, after which other stakeholders, including the companies’ creditors, can put forward their own ideas.
“There remains substantial ‘work to do’ to finalize” a proposal which could see most creditors offered liquid crypto, the creditors’ filing said, adding that there’s still no binding deal or decision as to whether to include Celsius' mining assets.
In a Jan. 25 motion, the company asked to extend its exclusive deadline for filing a plan by six weeks until the end of March, and to be able to solicit votes on it until the end of June. If the deal doesn’t come through, the reorganization could be replaced by a full liquidation of assets, the company said.
But according to U.S. Trustee William Harrington – a Department of Justice official responsible for bankruptcy cases – “There is no basis given to extend this case another five months just for the filing and soliciting of a plan.”
With the rate at which lawyers are "consuming" what's left of the company's assets, another extension through June "is inappropriate," Harrington said in a Wednesday filing.
A hearing on the issue is scheduled for Feb. 15 before Martin Glenn, a bankruptcy court judge in the Southern District of New York.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.