The U.S. Bankruptcy Court has given the green light to Celsius Network LLC’s transformation from a failed crypto lender to a Bitcoin mining venture. This decision paves the way for the company to begin reimbursing its customers.
Compensation Plan Confirmed
Judge Martin Glenn has officially approved Celsius Network’s proposal to compensate its creditors through a combination of digital assets and shares in the new Bitcoin mining operation. These shares will be publicly traded, offering a promising opportunity for the company and its customers.
Celsius Network’s legal team has stated that the distribution of assets may commence in the early months of the coming year. This news brings much-needed relief for the affected customers who have endured frozen accounts for over a year.
Background and Plan
In 2022, Celsius Network filed for Chapter 11 bankruptcy protection. The company’s bankruptcy filing revealed $4.3 billion in assets and $5.5 billion in liabilities, resulting in a deficit of around $1.2 billion. The majority of these liabilities amounted to user deposits worth $4.72 billion.
Since the filing, Celsius has been actively exploring strategies to restructure and compensate its customers. At the time of the Chapter 11 filing, the company mentioned the possibility of repaying customers with its existing mining equipment. Celsius Mining LLC, its mining branch, owns 80,850 mining rigs, with 43,632 currently in operation.
Over the following year, Celsius Network developed potential reorganization plans. Eventually, the court granted permission for Celsius to poll account holders regarding its proposal to restart as a “new user-owned company.” Users who were not willing to participate were given the option to opt out.
The restructuring plan received an overwhelming majority of creditor votes, with 95% in favor, according to Celsius. The court’s final approval of the plan is a significant milestone for Celsius Network, as it demonstrates their dedication to maximizing asset distribution to its customers.
However, the plan is still pending approval from the Securities and Exchange Commission (SEC). If the proposed mining operation collapses, Celsius may consider eventual liquidation as an alternative. If all goes well, Celsius anticipates emerging from Chapter 11 in early 2024.
