Celsius First Bankruptcy Hearing: What You Need To Know

Celsius, the crypto lender that filed for Chapter 11 bankruptcy protection last week, had its first bankruptcy hearing on Monday (19th July). At this hearing, they outlined plans to recover losses from its mining subsidiary, Celsius Mining. In a presentation, they also indicated possible third-party investment opportunities and asset sales, plus an option for customers to stay “long crypto” or accept a discounted cash settlement.

Discounted Cash Settlement, Or Option To Remain “Long Crypto”

The first bankruptcy hearing for Celsius was held on Monday in Manhattan and at this hearing and through a related document, the crypto lender has detailed plans that will permit customers to recover their balances. On 12th June 2022, Celsius suspended customer withdrawals and subsequently, last Wednesday 13th, filed for Chapter 11 bankruptcy in the Southern District of New York.

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Pat Nash of Kirkland and Ellis LLP is Celsius’ lawyer and stated most customers are interested in “riding out this crypto winter.” According to the bankruptcy filings, Celsius will offer customers an option of accepting a discounted cash settlement, or the option to remain “long crypto,” which could involve allocating CEL tokens.

Bitcoin Mining Plans

At the online bankruptcy hearing, Nash told U.S. Bankruptcy Judge Martin Glenn that bitcoin mining could provide a way for the company to repay customers. Celsius has a plan to recover its losses, that heavily depends on future profits of its wholly owned mining subsidiary, Celsius Mining. However, these future profits are obviously only projected and Celsius Mining is half-finished and is also a debtor. Celsius’ lawyers asked the bankruptcy court to allow for spending of over $5 million in order to compete construction of Texas the mining centre. The lawyers estimated this would take two months. In addition, these funds would pay for duties on mining rigs “currently sitting with the customs authorities.”

Celsius Considering “Asset Sales and Third-Party Investment Opportunities”

At a presentation before Monday’s hearing, Celsius also highlighted plans for “asset sales and third-party investment opportunities”. However, any further details on this are at the moment unclear. Watch this space for further developments on that, with Celsius’ bankruptcy proceedings continuing with the second remote hearing due to be held in the morning of 10th August.