Celsius Network, the insolvent crypto lending company, is seeking court approval to begin making payments to its customers by the end of the year, the firm's legal counsel Christopher Koenig said during October 2 bankruptcy court hearing.
Key to the proposed reorganization plan is NewCo, a new company with $450 million in seed funding focused on Bitcoin mining and staking, as outlined in the filing presented during the confirmation hearing.
Although NewCo will be owned by Celsius' customers, it will be managed by Fahrenheit, a consortium that won a bid to acquire Celsius Network in May 2023.
"Fahrenheit has committed to inject up to $50 million as an equity stake in NewCo, and Fahrenheit's management team will be compensated in NewCo Common Stock to best align the interests of Fahrenheit and creditors who will own NewCo," reads the filing.
The proposed plan, first outlined in August, also includes the distribution of approximately $2 billion worth of Bitcoin and Ethereum among Celsius' creditors.
Additionally, in order "to maximize liquidity," NewCo plans to be listed on the Nasdaq stock exchange, with the creditors getting equity in a newly formed entity.
Celsius tackles objections
Before its dramatic collapse in July 2022, Celsius Network was a major player in the crypto industry, boasting an impressive $25 billion in assets under management as of October 2021.
The company let users deposit a variety of cryptocurrencies and earn interest on their holdings. Additionally, users could take out loans by using their holdings as collateral, leveraging their digital assets for financial flexibility.
While an overwhelming majority of creditors last week voiced their approval for the restructuring plan, some remain opposed to it though.
The filing cites a total of 12 formal objections, including those made by the U.S. Trustee and the U.S. Securities and Exchange Commission (SEC), as well as 12 informal objection letters, and 2 reservation of rights received by the debtors.
To each of the objections the debtors provided responses defending their arguments.
The presiding judge, Martin Glenn, is currently considering the potential approval of Celsius Network's restructuring plan. However, the plan's ultimate success hinges on securing approval from the U.S. regulatory authorities.
The hearing regarding Celsius's Chapter 11 plan is slated to continue on Tuesday.
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Source: Decrypt.co
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