Bankrupt crypto lender Celsius is looking for a court approval for its reorganization plan, which will restart its business and see Celsius start paying back its customers, the company said during a hearing on 2 October.
During the hearing, Celsius legal counsel Christopher Koenig said Celsius is ready to restart its business under a new company dubbed “NewCo”, and noted that the new entity will have no funded debt and seed funding of up to $450 million. Should the request be granted, NewCo plans to start repaying customers — whose assets were frozen after the company collapsed last year — by the end of 2023.
A recent court filling from 29 September shows that the new entity is backed by a group of companies, and will be managed by investment consortium Fahrenheit, which has also agreed to invest up to $50 million as an equity stake in NewCo. Once the plan is approved, and the new company is set up, Celsius will start to partially repay its customers using $2.03 billion in Bitcoin (BTC), Ether (ETH), and stock in the new company.
Presiding judge Martin Glenn is currently considering whether to approve Celsius’ reorganization plan, but even if he does so, the company will still have to acquire the approval of securities regulators. Although more than 98% of impacted creditors have voted in favor of the plan, it is still being challenged by some creditors. If it receives the approval, Celsius will become the first crypto platform to revive after the bankruptcy wave from 2022.
Celsius was amongst several crypto companies to file for bankruptcy protection in July last year, owing billions of dollars to investors, following the collapse of the Terra ecosystem. Following the collapse of the company, former CEO Alex Mashinsky was sued by the Securities and Exchange Commission for alleged fraudulent activities, unregistered sale of crypto securities, and price manipulation of the CEL token.