In 2022, the cryptocurrency industry has faced a series of significant challenges, with many leading companies, from Celsius to FTX, facing major pressure. This year will probably be remembered as one of the most difficult years in cryptocurrency history. However, there appears to be a glimmer of hope for customers of crypto lender Celsius, as a restructuring plan has now been approved by its creditors.
More than 98% of creditors affected by Celsius' bankruptcy have voted in favor of a plan that would return crypto assets to them and share equity in the new corporate entity.
A voting statement filed by Stretto's restructuring team reveals that Celsius' creditors have given their support to a plan aimed at compensating them, amounting to between 67% and 85% of their holdings. While this proposal now awaits final approval from the court, it is worth noting that there have been objections raised to this deal, most notably from the US Trustee.
Under the plan, which has received support from the Official Committee of Unsecured Creditors, Celsius will distribute about $2 billion worth of bitcoin and ether to creditors, as explained in a letter issued by the group in August.
Next, there is a confirmation hearing for final approval scheduled for October 2 in the United States Bankruptcy Court for the Southern District of New York.
New Company NewCo
A committee member said last month that the debtor would also give shares in a new company known as 'NewCo' to creditors. 'NewCo' will be responsible for the debtor's Bitcoin mining operations, Ethereum management, monetization of the debtor's illiquid assets, as well as pursuing new business opportunities that bring added value and comply with regulations.
"NewCo will operate and further build the Debtor's Bitcoin mining operations, stake Ethereum, monetize the Debtor's other illiquid assets, and develop new value-added and regulatory-compliant business opportunities."
A consortium of individuals, Fahrenheit Holdings will be the manager of this new company. Fahrenheit Holdings is controlled by former Algorand CEO Steven Kokinos, with the backing of venture capital firm Arrington Capital, US crypto miner Bitcoin Corp, Proof Group Capital Management, and Arrington Capital advisor Ravi Kaza.
SEC Rejects Reorganization Plan
In discussions surrounding the reorganization of Celsius Network, the Securities and Exchange Commission (SEC) has expressed concerns about Coinbase's role in the services offered by Celsius. The SEC raised several objections regarding the proposed bankruptcy and reorganization scheme, primarily relating to inconsistent documents and federal securities law issues. These concerns, which include Coinbase's role, are expected to be part of the final approval scheduled for next October.