The new Celsius company will operate Celsius’ mining operations while taking over private equity, institutional loans, and venture capital investments.
As per the latest Bloomberg report bankrupt crypto lender Celsius Network LLC has started polling its account holders to restart a new user-owned company.
Soon after getting approval from US Bankruptcy Judge Martin Glenn, Celsius Networks will start sending ballots to account holders. Along with sending ballots to account holders, Celsius will provide voting materials with clear explanations about the company’s plans to repay its customers.
Judge Martin Glenn mentioned that he will give his approval if the company advisors give more details about the ups and downs of the crypto industry and any difficulties that might affect Celsius’ crypto mining activities. Crypto lender Celsius Network filed for Chapter 11 bankruptcy last year following the collapse of the Terra ecosystem.
However, under the leadership of Arrington Capital, the company is planning a fresh start. Arrington Capital had won the crypto lender’s assets at a bankruptcy auction earlier this year.
How Shall Celsius Network Repay Customers?
In the latest hearing, Celsius lawyer Chris Koenig said that the company is on track to repay customers by the end of this year. The bankrupt crypto lender shall repay its customers by offering equity in the new company.
This company will operate Celsius’ mining operations while taking over private equity, institutional loans, and venture capital investments along with $500 million in “liquid cryptocurrency” investments, notes the court documents.
However, Judge Glenn stated that there’s still a lot of work pending to proceed with the plan. Additionally, some of the customers at Celsius Network have opposed this repayment plan while other creditors could potentially challenge it in court.
Creditors of Crypto Lender Celsius Voice Displeasure
As Bloomberg reported, individual creditors have voiced displeasure over Celsius’ repayment plan. They think that they are being forced to take an equity stake in a risky new company. A number of customers have expressed the view that Celsius should return their native CEL tokens and are against the company’s proposal to value CEL tokens at 25 cents each.
However, Judge Glenn has outrightly denied that Celsius account holders won’t get their CEL tokens back. The Securities and Exchange Commission (SEC) has claimed that Celsius and its former CEO treated CEL similarly to stock in a public company, which is typically affected in Chapter 11 proceedings. The issuance of CEL tokens might not be possible since they relied on Celsius’ value, and after Chapter 11, there might not be a Celsius entity anymore, as Judge Glenn stated.