Celsius Demands 27.5% Asset Return from Creditors
The crypto lending company that went bankrupt in July 2022, Celsius, has taken bold steps to recover from its financial turmoil.
The company is now demanding a 27.5% return on substantial withdrawals made by creditors prior to the official filing for bankruptcy. Celsius is known to have started liquidating $7.3 trillion on January 5, 2024.
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According to a notice issued by Kirkland & Ellis (1/9/24) on behalf of Celsius as their client, Celsius users who withdrew more than $100,000 from the platform within 90 days before the bankruptcy statement must "settle their outstanding obligations" or face litigation.
K&E lawyers refer to pre-bankruptcy withdrawal actions as "avoidance actions," which can be pursued in court.
Creditors who fail to comply must return 27.5% of what they withdrew by no later than January 31, 2024, or face legal reimbursement proceedings.
To facilitate asset return, creditors need to submit a Selection Form and make a Settlement WPE Payment. Once these steps are completed, creditors receive confirmation from Celsius, acknowledging the payment and ensuring that all necessary actions under the Account Holder Avoidance Action Settlement have been fulfilled.
This confirmation releases creditors from any potential legal actions related to withdrawals, paving the way for them to potentially receive a portion of the redistributed funds trapped on the platform.
Celsius Shifts Business Direction for Compensation
Source : Photo by Microsoft 365 on Unsplash
Celsius declared bankruptcy on July 13, 2022, following a balance sheet deficit of $1.2 billion. Despite creditors approving the reorganization plan in September 2023, Celsius and its CEO, Alex Mashinsky, faced legal challenges from the SEC, FTC, and CFTC.
Mashinsky, charged with fraud, awaits trial in the fall. Celsius agreed to a $4.7 billion settlement with the FTC, contingent on the completion of the bankruptcy process.
In September 2023, creditors approved a reorganization plan involving a 72.5% replacement to custodial account holders in Bitcoin and Ether, while interest-bearing account holders would receive a combination of crypto and shares in Celsius-managed Bitcoin mining companies.
On the other hand, Celsius is shifting its business direction by allocating more resources to Bitcoin mining, expecting significant income generation and the potential to assist in repaying creditors.
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