Celsius Network Makes Progress in Exiting Bankruptcy with Potential Recovery of $7.8 Billion for Creditors

The Celsius Network cryptocurrency lending platform reported the achievement of two important agreements to get out of bankruptcy that it declared in July 2022. If successful, this would be good news for its creditors, who would have the possibility of recovering their funds.

According to documentation presented by Celsius, the agreements reached include the company itself and the creditors’ committee, representing various groups of creditors. Among all of them, They add up to more than 30,000 claims and could recover USD 7.8 billion in funds if Celsius’s plan goes ahead.

Celsius asks that the request be analyzed by Judge Martin Glenn at the hearing on August 10, with the intention of confirming the payment plan in October and “begin distributions to creditors before the end of the calendar year.”

One of the company’s proposals is to settle fraud and misrepresentation claims by increasing returns to creditors by 5%. Creditors still retain the right to bring individual lawsuits against the company if they choose not to accept the proposal.

On the other hand, for those who were included in investment programs in Celsius and were affected by the bankruptcy, a plan is proposed that will allow them to receive a portion of their funds in cryptocurrencies. Also a compensation in shares of the new company that arises from the bankruptcy process.

Regarding the details of the agreement, it was announced that it was reached “after three days of mediation” with Judge Michael E. Wiles, judge of the Bankruptcy Court for the Southern District of New York, and various groups of creditors involved. “Many of the proofs of claim filed by account holders sought damages for fraud, misrepresentation, and similar non-contractual causes of action,” they explain.

News of the month in the Celsius case

The latest developments in the Celsius case had also been positive for the company. On July 10, as reported in CriptoNoticias, received authorization to sell its altcoin holdings in exchange for bitcoin (BTC) and ether (ETH). In this way, it can interrupt the devaluation generated by the fall in the market value of several of these cryptocurrencies.

Meanwhile, the former CEO of Celsius, Alex Mashinsky, was arrested and had to pay a million-dollar bail to regain his freedom. He is accused of several charges related to fraud and scams, a consequence of the bankruptcy that his company filed in July 2022.