The New York bankruptcy court has approved Celsius Network‘s restructuring plan, allowing the cryptocurrency lending platform to move out of bankruptcy.
The plan involves transitioning to a new Bitcoin mining entity named NewCo, owned by creditors, with the redistribution of $2 billion worth of BTC and ETH to customers.
Over a year after initiating Chapter 11 bankruptcy proceedings and freezing customer funds, Celsius is now poised to proceed with its restructuring and repayment plan. Judge Martin Glenn of the US Bankruptcy Court Southern District of New York issued the order greenlighting Celsius’ move forward.
Judge Glenn, in the court ruling, stated, “The plan is confirmed pursuant to Section 1129 of the Bankruptcy Code.” This approval is a significant milestone for Celsius, which faced a liquidity crisis leading to its collapse in 2022.
The majority of Celsius creditors have supported the plan, managed by the consortium Fahrenheit LLC. However, the US Securities and Exchange Commission (SEC) has yet to approve NewCo, potentially leading to liquidation if unsuccessful.
Former CEO Alex Mashinsky, facing allegations of defrauding customers, is set to stand trial in September 2024, while another executive, Roni Cohen-Pavon, has pleaded guilty. Celsius also settled with the FTC, agreeing to a $4.7 billion fine and a ban on managing customer funds.
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