As per the recent development, a majority of Celsius creditors have voted in favor of a reorganization plan. The plan would see Bitcoin and Ethereum tokens, accounting for almost $2 billion, being returned to creditors. The plan would set the stage for the distribution of equity via the establishment of a new company.
The voting results are in! Over 95% of creditors across all eligible classes voted to accept the Plan, a testament to our collaborative efforts during Chapter 11. https://t.co/9Z5xlBhNts @CelsiusUcc @FahrenheitHldg.
— Celsius (@CelsiusNetwork) September 25, 2023
According to a recent filing from the bankruptcy firm, Stretto, a staggering percentage of more than 98% voted in favor of the reorganization plan. Despite creditors making an almost unanimous decision regarding the plan, it is still in need of final approval along with a confirmation hearing in the United States Bankruptcy Court for the Southern District of New York. However, both of these have been scheduled for October 2 this year.
The company via which the equity would be distributed has been temporarily named NewCo. It would operate and develop the mining operations of the debtors, stake Ethereum, develop additional regulatory-compliant business activities, and much more. The new company would be managed by the Fahrenheit Group, which is an amalgamation of several crypto native organizations and individuals.
It is a fact that the Celsius Network was among the first major casualties of the 2022 bear market. As a result of the turbulence, Celsius had no other option but to file for bankruptcy.
Celsius Lands Itself in Legal Crosshairs
The situation did not improve for Celsius even after filing for bankruptcy. Not too long after, the firm faced immense regulatory pressure from the SEC, as the regulator charged Celsius for fraud, selling unregistered securities, and price manipulation of its native token, CEL.
The former CEO of Celsius, Alex Mashinsky, was also arrested on these charges. Keeping this as an example, the dangers surrounding the overall volatility of crypto become clear for the firm. However, the reorganization plan might offer creditors a ray of hope, but what lies ahead is still a matter of conjecture.
The upcoming court hearing would have an important role in determining the fate of assets worth billions along with the future of the newly formed NewCo. The reimbursement plan and its approval are surely a ray of hope for the community of Celsius but it is yet to be seen how does the execution of this plan maps out.