Celsius Network has been granted approval for an alternative bankruptcy exit route, shifting away from the initially proposed deal with the Fahrenheit consortium. The new plan involves creating a public company exclusively dedicated to Bitcoin mining, instead of a multi-business company managed by the Fahrenheit consortium, as approved by Celsius’ creditors.
The change in direction occurred because the United States Securities and Exchange Commission (SEC) did not grant the required relief for the implementation of the initial option in the bankruptcy exit plan, involving the creation of NewCo. Under the first plan, NewCo, managed by the Fahrenheit consortium, was meant to expand Celsius’ mining operations and business activities. However, the SEC’s denial led to the adoption of an alternative route known as the Orderly Wind Down.
Under the revised plan, creditors will receive a portion of their recovery through shares in the upcoming Bitcoin mining company. Additionally, the plan unlocks $225 million in crypto assets initially intended for the new businesses rejected by the SEC. The plan also involves the redistribution of approximately $2 billion in Bitcoin and Ether to Celsius creditors.
Some creditors and the U.S. Department of Justice’s bankruptcy watchdog argued that Celsius should conduct a new vote on the proposal. However, Judge Martin Glenn determined that the new restructuring strategy would not have an adverse effect on creditors, and re-solicitation would not be required.
Celsius Network, one of several crypto lenders that collapsed in 2022, filed for bankruptcy in July. Its former CEO, Alex Mashinsky, was arrested in July 2023 on charges of securities fraud, commodities fraud, and wire fraud.
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