Celsius Network, the embattled crypto lender, has received approval from the United States bankruptcy court to proceed with its bankruptcy restructuring plans.
The court’s decision allows Celsius Network to transition into a creditor-owned Bitcoin mining firm as part of its efforts to repay customers who suffered losses during the company’s liquidity crisis over a year ago.
Repayment Plan Activation
Guided by Judge Martin Glenn of the New York bankruptcy court, Celsius Network will repay affected customers by utilizing a combination of crypto assets and stock in the newly established creditor-owned Bitcoin mining company. Celsius’ legal team anticipates commencing the distribution of assets to customers early next year.
Initially, Celsius Network proposed a repayment plan amounting to approximately $2 billion in Bitcoin and Ethereum under the management of investment firm Arrington Capital. This plan involved customers receiving partial repayment through shares in the new company responsible for managing the crypto lender’s mining activities.
However, customers expressed concerns about owning shares in a project with unproven integrity.
Approval and Customer Support
Despite initial hesitations, Celsius Network creditors voted overwhelmingly in favor of the restructuring plan, with 98% supporting the proposal. This favorable vote paved the way for Celsius Network to seek approval from the bankruptcy court, marking a significant milestone in the company’s journey to financial recovery.
Legal Developments In Celsius Network
Meanwhile, the company’s former CEO, Alex Mashinsky, charged of defrauding customers, is scheduled to appear in court next year. His criminal trial, set for September 17th, 2024, will address accusations of dishonesty about the financial state of the firm. Alongside Mashinsky, Roni Cohen-Pavon, the former Chief Revenue Officer of Celsius Network, also faces legal proceedings related to the case.
The company’s approval to restructure into a creditor-owned Bitcoin mining firm also represents a turning point after a turbulent year of financial challenges. With the court’s support, the company can now move forward with its plans to repay affected customers.