Celsius Network filed for Chapter 11 bankruptcy protection in April 2022, in hopes of reorganizing its debt and finding a buyer for its assets.
Bankrupt crypto lending company Celsius Network has taken a significant step forward in prioritizing the needs of its creditors. The company is currently seeking court approval to operate efficiently distribute payment To his creditors before the year ends. The proposed scheme demonstrates Celsius’ commitment towards transparency and efficiency in serving its creditors across the board.
New deal for Celsius Network lenders
According to an opening statement at a confirmation hearing in New York, Celsius’ legal counsel Christopher Koenig said the company aims to establish a new unit called NewCo, which focuses primarily on Bitcoin (B T c) Mining and staking activities. To advance this venture, Newco will receive an impressive $450 million in seed funding and will be owned by Celsius’ customers but managed by Fahrenheit, the consortium that will acquire the company.
Notably, if Celsius’s plan is approved, it would be the first failed crypto platform to be revived in a Chapter 11 bankruptcy case starting in 2022.
Meanwhile, the decision to form a new entity reflects the distressed crypto lender’s dedication to adaptability and foresight, and will also ensure enhanced financial stability for its creditors. As planning involves, it also allows for more efficient allocation of resources giving out Approximately $2 billion worth of BTC and Ethereum (ETH) to existing creditors.
Undoubtedly, the issue of frozen funds arose as a result of the challenges faced by Celsius, and Newco’s commitment to resolving it stands as a testament to responsible succession planning. Recognizing the financial burden placed on customers, Newco views the repayment initiative as the optimal recovery option by giving priority to the restoration of customers’ financial assets.
Also, the repayment plan marks a strategic move by NewCo to distance itself from the past troubles of the bankrupt crypto lender. The successor company understands the importance of fostering a positive reputation, and addressing the financial complaints of affected customers is an important step toward rebuilding trust and credibility.
However, individual creditors have expressed displeasure over Celsius’ repayment plan. They feel they are being forced to take an equity stake in a risky new company.
Celsius’ journey out of bankruptcy
Celsius Network filed Filed for Chapter 11 bankruptcy protection in April 2022, in hopes of reorganizing its debt and finding a buyer for its assets. In October the company started auctioning its assets. After several bids, Fahrenheit emerged As the winning bidder for Celsius’ assets in May 2023. Fahrenheit offered to pay $300 million in cash and $700 million in Fahrenheit tokens for the company’s assets.
However, in a recent development, Celsius introduced an update to its bankruptcy exit plan, The new plan states that customers who deposited or borrowed fiat currencies will not receive any recovery from Celsius or Fahrenheit; instead, they will have to file claims as unsecured creditors, a move that would be inconsistent with the new deal. For this is increasing the dissatisfaction of creditors.

Benjamin Godfrey is a blockchain enthusiast and journalist who loves writing about real-life applications of blockchain technology and innovations to promote general acceptance and worldwide integration of the emerging technology. His desire to educate people about cryptocurrencies drives his contributions to well-known blockchain media and sites.
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