Celsius commits to massively repaying cryptocurrencies: $2 billion to creditors by the end of 2023

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Celsius Network, a bankrupt digital asset lender, has announced plans to begin repaying its creditors before the end of the year using billions in crypto assets.

The company outlined a restructuring plan outlined in a recent filing with a U.S. bankruptcy court. The plan aims to generate funds for a new spin-off company called “NewCo” and facilitate customer refunds.

According to the filing, the plan calls for distributing at least $2.03 billion in cryptocurrency to creditors, with the actual amount subject to fluctuations in the cryptocurrency market. This distribution will occur as soon as practicable after the plan becomes effective, either through the NewCo transaction or through an orderly liquidation.

The NewCo transaction, sponsored by the Fahrenheit Group, is an important part of the plan. This is the creation of a new customer-owned cryptocurrency company that will focus on bitcoin mining and stacking. NewCo will be managed by experienced crypto-native operators from Fahrenheit and aims to maximize liquidity through a listing on NASDAQ. Fahrenheit has agreed to provide up to $50 million in equity investment in NewCo to align the interests of Fahrenheit and the creditors who will hold shares in the new company.

If the NewCo transaction cannot be completed, the plan provides an orderly liquidation option that would allow creditors to obtain better repayments compared to a Chapter 7 liquidation.

Celsius' legal representative, Christopher S. Koenig, reveals that the restructured company is expected to emerge from Chapter 11 and receive $450 million in capital and financial support. The focus, however, remains on the success of the NewCo transaction, which would be a significant milestone as the first revival of a failing crypto platform under Chapter 11, after the wave of bankruptcies that hit the sector last year.

Currently, the company's native token, CEL, is trading at $0.1535. Although the token is down 1.1% over the past 24 hours, it has seen a clear upward trend over the past 30 days, increasing by over 21%.

The Celsius plan is currently being reviewed by Justice Martin Glenn. Some customers who did not have access to their funds have appealed. A subsidiary of Lantern Ventures, which is owed $82 million, also challenged the plan, saying the new business was overvalued. Approval from securities supervisory authorities is also required.

It is important to note that if the new business fails, liquidation could be possible, potentially resulting in fewer refunds for customers. Nonetheless, Celsius Network's proposed plan represents a significant effort to repay creditors and eventually revive the company, giving hope to both the cryptocurrency industry and relevant stakeholders.