The U.S. Bankruptcy Court has given approval for Celsius Network LLC to transition from a failed crypto lender to a Bitcoin mining business. The court’s decision allows the company to repay its creditors using a combination of digital assets and shares in the new Bitcoin mining venture, which is set to be publicly traded. The approval paves the way for asset distribution to begin early next year, offering relief to affected customers whose accounts have been frozen for over a year.
Celsius Network’s Collapse
Celsius Network, which filed for Chapter 11 bankruptcy protection in 2022, revealed in its bankruptcy filing that it held $4.3 billion in assets against $5.5 billion in liabilities, resulting in around $1.2 billion in deficits. The majority of the liabilities consisted of $4.72 billion worth of user deposits. Celsius has been exploring ways to restructure and compensate customers, with the possibility of repaying them using the mining equipment it owns. The company’s mining operation, Celsius Mining LLC, owns 80,850 mining rigs, of which 43,632 were reported to be “in operation.”
The Restructuring Plan
In the subsequent year, Celsius Network explored potential reorganization plans and obtained court permission to poll account holders on its plan to restart as a “new user-owned company,” with an option for users unwilling to participate to opt out. The restructuring plan, with 95% of the voted creditors in favor, received final approval from the court, marking a significant milestone in Celsius’ efforts to maximize asset distribution to its customers. While awaiting approval from the Securities and Exchange Commission (SEC), Celsius may seek eventual liquidation if the mining operation proposal fails. If successful, the plan is expected to be implemented, and Celsius aims to “emerge from Chapter 11” in early 2024.
