Defunct crypto lender Celsius Network has proposed a joint reorganization plan to resolve its outstanding claims and interests under Chapter 11 of the Bankruptcy Code.
As part of this plan, Celsius has requested court approval to convert all altcoin holdings, except those designated for Withhold or Custody accounts, to Bitcoin and Ethereum. According to the filing, the conversion will be done using commercially reasonable efforts to maximize value. If the plan is approved, Celsius will begin converting the altcoins on July 1.
Celsius Customers Alert
For several reasons, celsius’ move to convert all altcoins to Bitcoin and Ethereum is strategic. Firstly, it allows the company to streamline operations by focusing on the two most popular and valuable cryptocurrencies.
This will simplify the management of Celsius’ cryptocurrency holdings and potentially reduce costs associated with holding and managing a diverse range of altcoins.
Secondly, Bitcoin and Ethereum are widely accepted and traded in the cryptocurrency markets, making them more liquid than most altcoins. By holding Bitcoin and Ethereum, Celsius can easily buy and sell these cryptocurrencies as needed without worrying about other altcoins’ liquidity.
However, David Adler, lawyer and representative of Celsius customers, has raised concerns over the company’s proposed reorganization plan. In a statement, Adler claimed that the plan violates consumer lending laws at both the state and federal levels.
Adler’s objection primarily focuses on treating Retail Borrow Claims, which the Debtors have elected to treat through the Set Off Treatment.
Adler argues that although the Debtors are demanding repayment of the loans, they have no intention of performing their contractual obligations by returning the collateral to the borrowers. According to Adler, this is a clear violation of consumer lending laws.
In addition to this objection, Adler also criticized Celsius for failing to communicate with the borrower group for six to seven weeks. He believes that further exclusivity extensions are not warranted and that Celsius needs to demonstrate “cause” to justify an extension.
The Celsius Network Official Committee of Unsecured Creditors has already approved the plan, but opposing parties can submit written objections to the court electronically. These objections will be heard during the June 28 hearing, and opposing parties must submit their objections by June 26 and appear in court to have their claims assessed by the court.
Overall, the defunct crypto lender’s proposed plan of reorganization is facing opposition from some parties, including a group of Celsius customers represented by David Adler. It remains to be seen how the court will rule on these objections and their impact on the network’s bankruptcy proceedings.
Featured image from Unsplash, chart from TradingView.com