Celsius to repay +70% of custody account holders’ claims
A New York bankruptcy judge today approved a deal struck between troubled crypto lender Celsius Network and its “custody account holders” that will allow them to begin immediate withdrawals of 72.5% of their claims.
The United States bankruptcy court judge, Martin Glenn, approved the settlement agreement between the Celsius debtors, the unsecured creditors committee and an ad hoc group of custodial account holders. However, those who opt into the settlement must accept not to pursue any litigation, including seeking relief from the automatic stay, turnover, or other claims or causes of action.
According to the terms of the deal, individual custody account holders would receive their 72.5% claim in two distributions, a move that would bring the bankruptcy case a step closer to conclusion. The first tranche would be distributed upfront, and the second installment is set to be paid by the end of the year upon plan resolution.
Celsius announced in February 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.
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.
