Debtors of bankrupt crypto lender Celsius Network have presented a sale plan to the U.S. Bankruptcy Court of the Southern District of New York.
The plan is as part of the overall reorganization plan for Celsius' retail platform and mining business and has the support of the official committee of unsecured creditors (UCC).
At the center of the plan is an in-principle agreement with NovaWulf Digital Management (“NovaWulf”), a digital asset investment firm, making it the plan sponsor.
The Debtors chose NovaWulf as it "provides the best method to distribute the Debtors’ liquid crypto assets and maximize the value of the Debtors’ illiquid assets through a new company run by experienced asset managers," the filing said.
The plan is the product of the Debtors’ court-approved sales process which Celsius Network lawyers had outlined in January 2023. They had said that the bankrupt crypto lender is planning to reinvent itself as a new, publicly traded “recovery corporation” in order to exit the bankruptcy process.
The "comprehensive" sale process involved Debtors’ advisors contacting over 130 parties and executing non-disclosure agreements with 40 potential bidders. This was whittled down to six bids for the retail platform, and three bids for the mining operation.
The next step will be to finalize a binding agreement to designate NovaWulf as the successful bidder.
According to the plan, NovaWulf will make a direct cash contribution of $45 million to $55 million to NewCo, a term used a describe a corporate spin-off before it is assigned a final name.
NewCo will be a regulatory-compliant public, reporting company 100% owned by Earn creditors, all of whom will receive a significant distribution of liquid crypto, with a "convenience class" of creditors receiving 70% recovery of their funds. No Celsius founder will be involved in NewCo and the majority of the NewCo board will be appointed by the UCC.
The plan specifically reserves $50 million for NewCo's mining operations, among other mining-related specifics.
U.S. bankruptcy law normally gives a company four months in which it can exclusively set out how it will wind affairs up. A bid by Celsius to further extend that period has been opposed by creditors and the U.S. government.
UPDATE (Feb. 15, 08:13 UTC): Adds additional details and background.
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