Celsius opts for NovaWulf’s offer to exit the bankruptcy

Bankrupt cryptocurrency lender Celsius Network has selected NovaWulf Digital Management as a sponsor for its proposed Chapter 11 restructuring plan, which would see the investment advisory firm take over the operations of a new company and expect most clients to get up to 70% of their money back.

Celsius presented the plan Feb. 15 in a filing with the United States Bankruptcy Court for the Southern District of New York. The proposed plan has the support of the Celsius Official Committee of Unsecured Creditors (UCC) — a body that represents the interests of Celsius account holders.

The plan envisions the creation of a new public platform wholly owned by Earn’s creditors, called NewCo, with the UCC appointing the majority of the company’s board members. The plan states that the new board will have no “involvement or relationship with the founder of Celsius”.

NovaWulf will also make a direct cash contribution of between $45 million and $55 million to the new company.

In the filing, Celsius said that “The NovaWulf plan provides the best method of distributing the Debtors’ liquid crypto assets and maximizing the value of the Debtors’ illiquid assets through a new company led by experienced asset managers.”

The new company will house Celsius’ illiquid assets, mining operations and existing loan portfolio with future plans to develop crypto-oriented services.

The outlines and outlines of the proposed plan for NewCo. Source: Stretto

Under the plan, creditors with claims worth $5,000 and below will be placed in a “Convenience Class” by the date of the petition, receiving “a one-off distribution of liquid crypto” paid in the form of Bitcoin (BTC) , Ether (ETH). and USD currency (USDC).

It is estimated that the option will give more than 85% of Celsius customers about 70% of their deposited crypto. Any Earn creditor with a balance of more than $5,000 can choose to reduce a claim to $5,000 and participate in the class.

Celsius’ Earn Creditor Distribution Plan. Source: Stretto

Those with a claim of more than $5,000 – or those with a claim of more than $1,000 who opt out of the Convenience Class shares – will receive a payment of the remaining crypto after the payments to smaller accounts.

In addition, they will take ownership of NewCo through equity tokens and management shares, which will pay dividends to holders.

Earn users holding Celsius (CEL) tokens, a native token used for user rewards that currently trades around $0.50, valued and purchased at the initial coin offering (ICO) price of $0.20 .

The plan would ensure that “insider CEL token claims,” or those buyers who received early ICO access, “do not receive a recovery.”

The plan also calls for the establishment of a “well-funded litigation board” to pursue lawsuits against Celsius executives and former CEO Alex Mashinsky.

The proposed plan must be approved by U.S. Bankruptcy Judge Martin Glenn before it is adopted.

Six companies placed bids for Celsius crypto assets, including Binance, Bank To The Future, Cumberland DRW, and Galaxy Digital, from a process that saw Celsius contact “more than 130 parties.”

The company filed for Chapter 11 bankruptcy in July 2022 after halting shooting citing “extreme market conditions” and rumors of insolvency.






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