During a bankruptcy court hearing that took place on October 2nd, the legal counsel of Celsius Network, Christopher Koenig talked about the company’s intentions of paying back its creditors.
He revealed that the insolvent crypto firm was seeking court approval to start making payments to its customers by the end of the year.
NewCo
One of the key elements of the reorganization plan proposed by the company is a new firm named NewCo, which has managed to raise seed funding of about $450 million.
During the confirmation hearing, a filing was presented, which revealed that the new company would be focused on Bitcoin staking and mining.
Although Celsius’ customers will own NewCo, Fahrenheit will manage the new company, which is a consortium that had emerged victorious in the bidding to acquire the crypto lender in May this year.
The filing revealed that Fahrenheit was ready to add equity stake worth $50 million into NewCo and its management team would receive compensation in Common Stock in the new firm.
This would be the best way of aligning the interests of the creditors who will own the company as well as Fahrenheit.
The reorganization plan
First revealed in August, the reorganization plan would also see Celsius creditors receive about $2 billion worth of Bitcoin and Ethereum.
Furthermore, NewCo is also planning on getting listed on the Nasdaq stock exchange for the purpose of maximizing liquidity, which means creditors would receive equity in a newly formed company.
Before its downfall last year in July, Celsius Network had been a notable player in the crypto sector, as its total assets under management as of October 2021 had been about $25 billion.
Users had been able to deposit a variety of crypto tokens on the platform and received interest on their holdings.
Furthermore, users also had the option of using their tokens as collateral for obtaining loans, which allowed them to leverage their digital assets for greater financial flexibility.
The response
Last week, a majority of the creditors had given their approval for the restructuring plan, but there are also those who opposed it.
A total of 12 objections were raised against the plan that was mentioned in the filing, which also includes the ones made by the US Securities and Exchange Commission (SEC) and US Trustee.
It also included 2 reservations of rights that the debtors had received and 12 informal objection letters. The debtors responded to each objection and defended their arguments.
Martin Glenn, the judge presiding over the case, is considering the potential approval of the reorganization plan that has been put forward by Celsius Network.
However, the ultimate success of the plan hinges on the approval of the regulatory authorities in the United States.
The hearing related to the Chapter 11 plan of Celsius Network is scheduled to continue on Tuesday.