Celsius has stated at a bankruptcy hearing that its mining outfit should be able to repay some creditors ahead of total reorganization.
Embattled crypto loan company Celsius Network revealed its reorganization plan based on mining activity at its first bankruptcy hearing. Owing more than $5 billion to half a million creditors, the firm identified its similarly-indebted mining operation as a recourse. According to Celsius, this mining operation can help offset the staggering $1.2 billion debt on the company’s balance sheet.
Since it filed for Chapter 11 bankruptcy at a New York-based federal court, Celsius has concerned itself with how to pay off its creditors. Many of these creditors are average retail investors and depositors who potentially face a long road to recovery.
Celsius Betting Big on Mining Ahead of Reorganization
On the first day of its bankruptcy proceedings, Celsius’ attorneys argued interim motions to allow the company continue operations. Furthermore, ahead of its eventual reorganization, Celsius also looks to open another mining facility to better repay creditors.
Approximately 200 people joined the Celsius hearing, which took place via Zoom. Much of this proceeding comprised a recap of the influencing external events and eventual build-up to Celsius’ bankruptcy. In addition, the hearing also featured a breakdown of the beleaguered crypto company’s funds. Among documents presented at the court was a 61-page declaration from Celsius CEO Alex Mashinsky detailing its recoupment strategy.
Celsius to Provide Additional Information as Proceedings Unfolds
For the most part, presiding Judge Martin Glenn appeared ready to comply with Celsius’ mining-oriented requests. However, the Department of Justice’s Office of the US Trustee demanded more transparency from Celsius going forward. Glenn agreed with this demand.
According to Kirkland & Ellis restructuring partner Patrick Nash, Celsius was grateful for the opportunity to communicate a path forward. Nash further stated that this is even more apparent given that the embattled firm refrained from speaking to its community prior to its filing. In fact, Celsius did not communicate much following its decision to halt customer withdrawals last month due to the crypto market slump. Now in light of the ongoing bankruptcy proceedings, Nash explained:
“Chapter 11 gives Celsius the opportunity to start answering at least some of these questions. Chapter 11 affords us a forum to communicate with our customers on the path forward.”
In addition, Nash also further informed concerned investors who still have funds trapped in the firm’s frozen coffers. According to him, the proceedings will not be a liquidation, but rather one that seeks to maximally refund affected customers. As Nash put it:
“We do not intend to force customers to take their recovery in fiat currency. All is not lost. We intend for this to be a reorganization. Our goal is to maximize the value of Celsius assets for the benefit of our customers.”
Nash also stated that the US Trustee will establish a Creditor Committee to advise on the Celsius restructuring. He also added that support from the community will be critical during the proceedings.
Celsius’ digital asset holdings shrank from $14.6 billion at the end of March to $1.7 billion as of July 14th. Put in perspective, the company currently owes customers three times the value of its digital asset holdings.