Celsius Reaches Agreement with NovaWulf to Reorganize and Create a New Company

By ZeroRequiem | Zero Ex | 15 Feb 2023

Hey Peeps!

On February 15th, Celsius submitted a reorganization plan, to the U.S. Bankruptcy Court of the Southern District of New York, that calls for a full sale and reorganization of Celsius as a new company.

Out of the 40 potential bidders, Celsius has selected the digital asset investment firm, NovaWulf, to manage this proposed sale and reorganization plan.

The plan calls for the creation of a new company that will be owned and operated by NovaWulf.

Based on the proposed plan, NovaWulf has agreed to contribute between $45 and $55 million to the creation of the new company, and will also commit $50 million to the new company's mining business.

Interestingly, but also very important, no Celsius founder will be involved in the new company, and the majority of the Board will be appointed by the Official Committee of Unsecured Creditors (UCC).

Finally, the proposed plan estimates that over 85% of customers could potentially recover close to 70% of their claims in liquid crypto, not counting the claims involving staked Ethereum.

Here is the official court document, submitted by the Celsius' Debtors, putting forth their plan for the sale and subsequent reorganization of the bankrupt crypto company: https://cases.stretto.com/public/x191/11749/PLEADINGS/1174902152380000000043.pdf

Here is a tweet from the Celsius' Official Committee of Unsecured Creditors (UCC) announcing the NovaWulf plan:

"Because most of the other bids the Debtors received contemplated variations of a liquidation plan, the Debtors believe that the agreement with NovaWulf maximizes the value of the Debtors’ assets and will ultimately bring these chapter 11 cases to a successful conclusion."

- Celsius

It has been quite the journey for the customers of Celsius.

Way back on June 12th of 2022, Celsius halted withdrawals for all customers.

The next month, Celsius filed for Chapter 11 Bankruptcy.

Since then, there has not been a ton of solid news come out regarding Celsius and their plan to repay their customers.

Hopefully now, with an agreement in place, the Celsius customers can finally get their crypto back.

With that said, there is some contention regarding the amount that customers may actually see returned to them.

According to two separate reports, one by an independent examiner and the other by the Vermont Department of Financial Regulation, Celsius' own native token (CEL) was manipulated by to benefit insiders, including the executives and even the CEO Alex Mashinsky.

Due to the CEL token being manipulated, it is now hard for bankruptcy examiners to determine a fair price for holders, seeing as the majority of holders are these insiders.

If a high price is assigned to CEL, then this will only serve to reward these insiders who manipulated the token price.

While on the other side, if a low price is assigned to CEL, then this hurts the normal holders of CEL.

“I don’t think we’ve reached a 100% final conclusion there, but given the fact that the examiner report reveals in great detail how the price of CEL token was manipulated, we’ve really struggled with how to treat the CEL token and what is a fair value to ascribe to it."

- Ross Kwasteniet, Celsius’ lead attorney

What are your thoughts about this plan for Celsius?

Do you think customers will be first in line to get their crypto back?

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