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Celsius Networks said that the bankruptcy proceedings will help stabilize its business and create a restructuring plan to return payments to its customers.
After weeks of trying to avoid bankruptcy, crypto lender Celsius Network finally had to give up. On Wednesday, July 13, Celsius Network filed for Chapter 11 bankruptcy in the United States Bankruptcy Court for the Southern District of New York.
Celsius said that this move will help the company stabilize its business and create a restructuring plan. Besides, it will also help in protecting its customers’ interests. Speaking on the matter, Celsius CEO Alex Mashinsky said:
“This is the right decision for our community and company. We have a strong and experienced team in place to lead Celsius through this process. I am confident that when we look back at the history of Celsius, we will see this as a defining moment, where acting with resolve and confidence served the community and strengthened the future of the company.”
The troubled crypto lender had recently hired Kirkland & Ellis LLP for the restructuring process. Celsius Networks said that it has $167 million cash on hand. The company believes that this will be sufficient to support certain operations during the restructuring process.
The Chapter 11 bankruptcy will allow Celsius Networks to negotiate with the creditors and alter the terms of the loan. Furthermore, it won’t have to mandatorily liquidate its assets in the process. The announcement from Celsius comes a week after another crypto lender Voyager Digital filed for Chapter 11 bankruptcy.
Celsius’ Loan Repayments
Celsius Networks stopped withdrawals on its platform last month in June. However, it has been working hard to repay its debt. as per details, Celsius Networks has repaid more than $880 million of its debt to decentralized finance (DeFi) apps including Aave, Compound, and Maker.
The recent repayment happened earlier this week of $130 million wherein Celsius unlocked over 6,000 WBTC in collateral. The restructuring process following the bankruptcy filing will further help Celsius in repaying its debt. Members of the Special Committee of the Board of Directors said:
“Today’s filing follows the difficult but necessary decision by Celsius last month to pause withdrawals, swaps, and transfers on its platform to stabilize its business and protect its customers. Without a pause, the acceleration of withdrawals would have allowed certain customers—those who were first to act—to be paid in full while leaving others behind to wait for Celsius to harvest value from illiquid or longer-term asset deployment activities before they receive a recovery.”
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