- Celsius Network has been approved to implement its bankruptcy exit plan.
- Creditors and customers to recoup billions.
- The plan awaits another approval from the U.S. securities watchdog.
Embattled one-time crypto lender Celsius Network will likely return to the industry as a creditor-owned bitcoin mining company as its Chapter 11 proceedings near the end.
On November 7, Judge Martin Glenn of the Southern District of New York Bankruptcy Court endorsed Celsius’s plan to create a new company around its mining and staking activities. This will enable Celsius to pay creditors the billions of dollars it owes.
Creditors to Receive $2 Billion
According to the approved bankruptcy exit plan, Celsius intends to create a new firm called NewCo, funded by Celsius’s $450 million crypto holdings alongside a $50 million minority stake investment from crypto consortium Fahrenheit LLC.
Under the plan, Celsius will distribute $2 billion in Bitcoin and Ethereum to its creditors and company stocks in NewCo. Customers whose accounts were frozen following the bankruptcy will recoup some funds to be repaid through crypto and equity in the new entity.
In a follow-up post on Twitter (X), Celsius confirmed that it’s working to implement the plan, which will see the company emerge from bankruptcy in early 2024.
If the U.S. Securities and Exchange Commission (SEC) approves the plan, Celsius will be the industry’s pioneering crypto lender to resurrect from Bankruptcy.
Following the 2022 FTX collapse, which had a ripple effect across the industry, notable crypto-focused companies, including digital asset lenders BlockFi and Voyager Digital, fell into bankruptcy.
While BlockFi and Voyager were wiped out, and FTX is still entangled in Chapter 11 proceedings, Celsius has managed to leap ahead. As the manager of the renewed Celsius, Fahrenheit will list NewCo’s stock on Nasdaq.
Besides attracting potential investors, this move will allow customers repaid in equity to sell their NewCo shares once the bankruptcy recovery plan is in motion.
Stay updated on BlokFi’s plan to recover assets:
BlockFi to Pursue Asset Recovery Amid Bankruptcy Resurgence
Explore how FTX debtors intend to indemnify customers:
FTX Debtors to Return 90% of Creditor Holdings to Customers