Celsius to exit bankruptcy case after reaching takeover deal
The troubled crypto lender Celsius Network has entered into an acquisition agreement with digital asset investment firm Novawulf Digital Management, a move that would bring its bankruptcy case a step closer to conclusion.
Celsius announced that its committee of unsecured creditors selected Novawulf out of more than 130 bids as the sponsor for its proposed Chapter 11 restructuring scheme. The new plan, which was described as a “value-maximizing conclusion,” has been arranged by Celsius’ Debtors and then obtained the full support of the creditors committee.
The buyout plan will see the digital asset investment firm assume control of a newly created company called “Newco” alongside a “litigation trust” that will cater to debts owed. NovaWulf would also contribute between $45 million and $55 million in direct cash to the new venture.
“The Debtors believe that the NovaWulf plan provides the best method to distribute the Debtors’ liquid crypto assets and maximize the value of the Debtors’ illiquid assets through a new company run by experienced asset managers,” Celsius stated.
Under the new plan, claimants with account balances of less than $5,000 will be placed in a “Convenience Class.” The move would effectively allow them to receive a one-time liquid crypto distribution such as Bitcoin, Ethereum, and the stablecoin USDC.
Customers of Celsius who are owed more than $5,000 will be allowed to reduce their claim to join the class and get reimbursed from the company’s remaining stash of crypto assets. Additionally, claimants owed at least $1,000 can opt out of the class and receive a portion of yet-to-be-determined funds recovered for general Earn participants.
In all, the bankrupt lender suggests the restructuring proposal would enable more than 85% of its clients to retrieve roughly 70% of their claims in liquid crypto—which doesn’t include staked Ethereum. However, the exact amount payable would be determined after the payments to smaller accounts.
As of December 29, creditors of Celsius who feel they are entitled to payment have filed more than 17,000 claims.
The news comes at a time when Celsius’ creditors community grows antsy as they observe how legal costs have continued to mount since the company originally filed for bankruptcy in July. According to a Financial Times report, the fees charged by bankers, lawyers and other advisers in the bankruptcy case are depleting the lender’s inheritance after surpassing $53 million as of December 27.
In one instance, Kirkland & Ellis from, one of the law firms representing Celsius, asked for a charge of more than $9 million for services rendered in two months, according to a statement dated December 15.
Earlier in June, Celsius abruptly announced that it was pausing all withdrawals, swaps and transfers between users’ accounts because of extreme market volatility. The crypto lending and borrowing platform first looked for possible financing options from investors but ultimately went bankrupt.