Some creditors are unhappy with the revealed plan and have expressed their opposition.
Insolvent crypto lending platform, Celsius, has filed an updated plan to exit bankruptcy with the help of crypto consortium Fahrenheit. However, the plan faces opposition from creditors who are unhappy with the deal and want their money back.
Celsius’ Journey Out of Bankruptcy
Celsius filed for Chapter 11 bankruptcy protection in April 2022, hoping to restructure its debt and find a buyer for its assets. In October, the company launched an auction for its assets. Following several bids, Fahrenheit emerged as the winning bidder for Celsius’ assets in May 2023.
Fahrenheit offered to pay $300 million in cash and $700 million in Fahrenheit tokens for Celsius’ assets, which include its user base, technology, brand name, and intellectual property. Fahrenheit also agreed to assume Celsius’ liabilities and honor its obligations to its users and creditors.
However, in a recent development, Celsius submitted an update to its bankruptcy exit plan. The new plan states that customers who have deposited or borrowed fiat currencies will not receive any recovery from Celsius or Fahrenheit. Instead, they will have to file claims as unsecured creditors. The plan also warns that customers may face tax consequences or regulatory issues as a result of the deal. It advises customers to consult their own tax and legal advisors before accepting the deal.
Creditors Oppose Updated Bankruptcy Exit Plan
Some creditors are unhappy with the deal and have expressed their opposition. They argue that Celsius has not returned their collateral or paid them interest as promised. They also claim that Fahrenheit’s bid undervalues Celsius’ assets and does not offer enough recovery for creditors.
One group of creditors, represented by lawyer David Adler, said they would challenge the deal in court. “This proposed treatment violates every consumer lending law out there,” Adler tweeted on Wednesday.
Another group of creditors, represented by an official committee of unsecured creditors, said “The Committee will continue to work diligently with all parties involved in this case to maximize recoveries for all unsecured creditors.”
Whatever the case, the deal still needs to be approved by the bankruptcy court and by a majority of Celsius’ creditors. The court has set a deadline of June 30 for creditors to vote on the deal.