Celsius Network, the embattled cryptocurrency lender, has received court approval for a revised bankruptcy exit plan. This new strategy pivots from its initial arrangement with the Fahrenheit consortium, focusing instead on establishing a standalone Bitcoin mining enterprise. The decision, sanctioned by Judge Martin Glenn on December 27, follows the United States Securities and Exchange Commission’s (SEC) rejection of the earlier proposed deal involving the creation of NewCo, a diverse business entity managed by the Fahrenheit consortium.
The initial exit plan, which envisioned the formation of NewCo to expand Celsius’ mining and business operations under Fahrenheit consortium‘s management, hit a roadblock with the SEC’s refusal to grant necessary approvals. This consortium included prominent crypto entities like Proof Group, Arrington Capital, and Hut 8. However, with the SEC’s denial, Celsius, backed by its creditors, opted for an alternative route previously agreed upon – transitioning towards a public company solely focused on Bitcoin mining.
This change in strategy is significant as it implies a narrower focus for the company’s future endeavors. The creation of this Bitcoin-centric firm marks a distinct move away from the diverse business model proposed earlier. Creditors are set to receive part of their recovery through shares in the upcoming Bitcoin mining entity. Moreover, this new direction allows the release of $225 million in crypto assets, initially earmarked for the now-rejected business ventures.
Under the new plan, approximately $2 billion in Bitcoin and Ethereum will be redistributed to the creditors of Celsius. This decision is a crucial aspect of the company’s strategy to address the financial claims of those affected by its bankruptcy. The plan’s approval came despite some creditors and the U.S. Department of Justice’s bankruptcy watchdog advocating for a re-vote on the proposal. However, Judge Glenn determined that this new restructuring strategy falls within the terms of the previously confirmed plan and does not adversely affect the creditors’ interests.