A lot has happened in the Celsius bankruptcy case since the platform first went bankrupt in July.
From accusations of fraud, claims that customers (or unsecured creditors, according to the company) signed into cryptocurrencies, and allegations that the former CEO had fled the country, Celsius’ legal proceedings were eventful. Even if only slightly. Lenders’ legal teams now claim that a liquidation will raise less money for creditors than a restructuring, and this may be true.
However, the restructuring process proposed by Celsius’ legal team relies heavily on printing new tokens to “assist in recovery.”
Plan allegedly proposed by creditors
At current prices, it will be difficult to liquidate Celsius assets, according to Ross Kwasteniet, a lawyer representing crypto lenders in the ongoing bankruptcy case. This situation has prompted several creditors of an unnamed company to propose restructuring plans based on newly created temporary recovery tokens. report by Bloomberg.
There is some precedent – coin flex, Bitfinex and others came up with similar ideas. Unfortunately, regardless of the optimistic language these struggling platforms use to sugarcoat the idea, it essentially dances around what replaces its lost assets, We create tokens from scratch.
according to the court documentKwasteniet argues that a revived version of Celsius’ “properly licensed public company” will ultimately bring more value to creditors than liquidation, and how the company will survive before it collapses. I questioned whether it was approved.
Further documents to support the proposal are due next week and will be submitted to Celsius creditors for a vote before being formally proposed to the judge presiding over the case.
Tokens paid to creditors with material claims
According to CeltensiFacts, an anonymous Twitter account covering the company’s lawsuit, the tokens will be distributed to creditors with claims over $5,000.
– #Celsius network Considering a strategic recovery, smaller holders under 5,000 may sell all assets.
– Large holders get a debt token that they believe represents all the value, so they can sell it if they don’t believe in the company or the recovery.
—CelsiusFactsNumbers (@CelsiusFacts) January 24, 2023
Creditors with assets under $5,000 will be able to withdraw all assets from the platform, provided the information presented by CelsiusFacts is accurate. If a creditor claims between her $5,000 and her $7.5,000, she can withdraw 95% to 100% of her assets, depending on the amount. The remaining percentage will be paid in recovery tokens suggested by the lender.
Unfortunately, if you deposit more than $7.5 million to Celsius, the proposed plan does not allow you to withdraw. Unfortunately, these users have no compensation other than recovery tokens.
Further updates on the proposal are reportedly due in court next week.
Binance Free $100 (Exclusive): Get $100 free and 10% off fees in your first month of Binance Futures when you register using this link (Clause).
PrimeXBT Special Offer: Register using this link and enter the POTATO50 code to receive up to $7,000 on your deposit.