A lot has happened during the Celsius bankruptcy case since the platform originally went under in July.
Between accusations of fraud, arguments that clients (or unsecured creditors, depending on the firm) signed their cryptocurrencies, alleged attempts by the former CEO to flee the country, and more, the Celsius court proceedings have been a wild ride, to say. than the least. Now, the lender’s legal team argues that the liquidation would raise less money for creditors than the restructuring, which may be true.
However, the restructuring process proposed by the Celsius legal team relies heavily on printing a new token to “help recovery.”
Plan allegedly proposed by creditors
According to Ross Kwasteniet, a lawyer representing the crypto lender in its ongoing bankruptcy case, the Celsius assets would be difficult to liquidate due to current prices. This situation prompted several unnamed company creditors to propose a restructuring plan based on a newly minted tentative recovery token, Bloomberg reported.
There are some precedents: CoinFLEX, Bitfinex, and others have had similar ideas. Unfortunately, regardless of the optimistic language used by these struggling platforms to sugarcoat the idea, it’s still essentially about creating a token out of thin air while dancing on the subject of what it’s replacing: lost assets.
According to court documents, Kwasteniet argued that a resurrected version of Celsius from a “properly licensed, publicly traded company” would ultimately bring more value to creditors than liquidation, raising the question of how he obtained the licensed the company before it collapsed.
More documents supporting the proposal will be submitted next week, and it would be presented to Celsius’s creditors for a vote before being formally proposed to the judge presiding over the case.
Tokens to be paid to creditors with significant claims
According to CelsiusFacts, an anonymous Twitter account covering the company’s court case, the tokens would be distributed to creditors with claims greater than $5k.
– #RedCelsius is considering having a tiered recovery, smaller holders below 5k could get all the assets to go.
– Larger holders will get a debt token that appears to represent all of the security, so you can sell if you don’t believe in the company or recovery.
— CelsiusFactsNumbers (@CelsiusFacts) January 24, 2023
If the information presented by CelsiusFacts is accurate, creditors with assets worth less than $5k could withdraw all of their assets from the platform. If a creditor claims between $5k and $7.5k, 95%-100% of the assets would be available for withdrawal, depending on the amount. The remaining percentage would be paid in the recovery token proposed by the lender.
Unfortunately, for those with more than $7.5k deposited in Celsius, the proposed plan would not allow any withdrawals. Unfortunately, these users would not have any compensation except the recovery token.
More updates on the proposal will reportedly be discussed in court next week.
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This post Celsius plans to get out of bankruptcy by issuing a new token
was published first on https://cryptopotato.com/celsius-floats-plan-to-exit-bankruptcy-by-issuing-new-token/