Celsius Swaps Legal Team, Continues to Pay Off Debt
- Celsius decided to hire new lawyers to advise on its available restructuring options, after reportedly resisting a Chapter 11 bankruptcy advice from previous counsel.
- The company has also continued to repay its outstanding debt with DeFi lending protocols, and today transferred 20 million USDC to Aave, reducing its total debt to around $215 million.
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Troubled crypto lending platform Celsius has hired new lawyers from Kirkland & Ellis LLP to advise on its available restructuring options, the Wall Street Journal reported on 10 July.
According to the publication, Celsius has decided to replace its current restructuring counsel from Akin Gump Strauss Hauer & Feld LLP with lawyers from Kirkland & Ellis LLP, an international law firm focused on private equity, M&A, and other corporate transactions. The law firm recently acted as the general bankruptcy counsel for Voyager Digital, which filed for Chapter 11 bankruptcy last week.
While Celsius’ management is yet to announce the company’s next step, it appears that its trying to avoid the same fate as Voyager Digital. In late June, The Block cited “people with knowledge of the situation”, who noted that Celsius’ lawyers at the time were advocating for filing a Chapter 11 bankruptcy, but executives at the company reportedly wanted to avoid the lengthy proceedings.
Celsius has also continued to repay its outstanding debts with decentralized finance (DeFi) lending protocols. Most recently, the company paid off a 20 million USD Coin (USDC) loan from Aave, which was captured by blockchain analytics firm Peckshield on 11 July. Last week Celsius also transferred $41.2 million to Maker, paying off its remaining debt to the protocol and freeing up around $500 million in Wrapped Bitcoin (wBTC) collateral.
Celsius paused all withdrawals, swaps, and transfers between accounts on its platform on 13 June, citing “extreme market conditions” as the reason. According to DeFi tracking platform Zapper, Celsius currently owes 130 million USDC and $82,500 in REN tokens to Aave, and approximately 85.2 million DAI tokens to Compound, which puts its total debt to around $215 million.
- The bankrupt crypto lender said that if its reorganization plan is approved, it is ready to start repaying its customers using $2 billion in BTC and ETH by the end of the year.
- If given the green light, Celsius will restart its business under the “NewCo” brand without any funded debt, and with seed funding of up to $450 million.
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- Bankrupt crypto lender Genesis is trying to recover around $500 million from DCG, and another 4,550.5 BTC from DCGI, which it had loaned to the two companies in 2022.
- Both DCG and DCGI requested that the debts were converted to open loans on 9 May, but Genesis declined both offers and demanded the repayment of the loans with interest.
- The bankrupt crypto lender has agreed on a settlement with its Series B holders on how to distribute the $25 million from the sale of self-custody platform GK8.
- The majority of funds, $24 million, will be allocated for legal expenses, while the remaining $1 million will be distributed between the Series B holders.