Celsius’ Bankruptcy Exit Plan Meets Creditor Resistance.

The crypto lending platform, Celsius, which is insolvent, has submitted an updated plan to exit bankruptcy with the help of the crypto consortium Fahrenheit. However, some creditors are opposing the deal and demanding their money back.

Celsius’ Journey Out of Bankruptcy

Celsius filed for Chapter 11 bankruptcy protection in April 2022 with the aim of restructuring its debt and finding a buyer for its assets. In October, the company launched an auction for its assets. After several bids, Fahrenheit emerged as the winning bidder for Celsius’ assets in May 2023.

Fahrenheit offered $300 million in cash and $700 million in Fahrenheit tokens to acquire Celsius’ assets, which include its user base, technology, brand name, and intellectual property. Fahrenheit also agreed to take on Celsius’ liabilities and fulfill its obligations to its users and creditors.

Recently, Celsius submitted an updated bankruptcy exit plan. The new plan states that customers who have deposited or borrowed fiat currencies will not receive any recovery from Celsius or Fahrenheit. Instead, they will have to file claims as unsecured creditors. The plan also warns customers that they may face tax consequences or regulatory issues as a result of the deal and advises them to consult their own tax and legal advisors before accepting the deal.

Creditors Oppose Updated Bankruptcy Exit Plan

Some creditors are unhappy with the deal and have expressed their opposition. They argue that Celsius has not returned their collateral or paid them interest as promised. They also claim that Fahrenheit’s bid undervalues Celsius’ assets and does not offer enough recovery for creditors.

One group of creditors, represented by lawyer David Adler, said they would challenge the deal in court. “This proposed treatment violates every consumer lending law out there,” Adler tweeted on Wednesday.

Another group of creditors, represented by an official committee of unsecured creditors, said “The Committee will continue to work diligently with all parties involved in this case to maximize recoveries for all unsecured creditors.”

Regardless of the opposition, the deal still needs to be approved by the bankruptcy court and a majority of Celsius’ creditors. The court has set a deadline of June 30 for creditors to vote on the deal.

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