Celsius Bankruptcy Recovery Plan Is Now Opposed By The SEC

Key Points:

• The SEC’s demand for more information on assets is stalling the Celsius bankruptcy recovery plan.
• Fahrenheit’s reorganization plan, backed by Arrington Capital and others, has court approval.
• The approved plan establishes NewCo to manage Celsius’s Bitcoin mining, Ethereum staking, and asset liquidation.

The Celsius bankruptcy recovery plan faces hurdles as the U.S. Securities and Exchange Commission (SEC) seeks additional details on the lender’s assets, according to a source reported by CoinDesk.

SEC Inquiry Hampers Celsius Bankruptcy Recovery Plan

An elaborate plan to establish a new crypto services business from the remnants of Celsius is encountering challenges in a back-and-forth exchange of information between the SEC, the Celsius Creditors Committee, and Fahrenheit, an investment vehicle that secured the right to issue shares in the new venture following a bidding contest in May.

The SEC’s request for more information has prompted discussions between the parties involved, with the committee now tasked with deciding how to proceed.

Fahrenheit’s Approved Restructuring Signals New Phase for Celsius

Fahrenheit, comprising Arrington Capital, U.S. Bitcoin Corp., and Proof Group, received court approval for Celsius bankruptcy recovery plan earlier this month, overcoming Celsius’s Chapter 11 bankruptcy protection filing in July 2022, which exposed a $2 billion deficit in its balance sheet.

Judge Martin Glenn of the Southern District of New York Bankruptcy Court confirmed on Nov. 9 that Celsius creditors overwhelmingly approved the bankruptcy plan on Sept. 27.

As per the approved Celsius bankruptcy recovery plan, approximately $2 billion in Bitcoin and Ether will be distributed to Celsius creditors, along with equity in the newly formed entity (NewCo). The company aims to commence creditor reimbursement by year-end. NewCo is slated to manage and expand Celsius’s Bitcoin mining operations, stake Ethereum, liquidate other illiquid assets, and explore new business opportunities, as outlined in the court filing.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.