Bringing Back Withdrawn Funds
The now-bankrupt crypto lender Celsius is considering legal action against its creditors who withdrew significant funds from the platform before its Chapter 11 bankruptcy declaration. According to reports, bankruptcy administrators acting on behalf of Celsius have commenced the procedure to notify creditors that withdrawn funds of more than $100,000 within 90 days preceding the firm’s bankruptcy filing on July 13, 2022, could impose repayment obligations.
The official filing submitted to the US Bankruptcy Court Southern District of New York outlines account holders’ standards to be classified as having “withdrawal preference exposure” over $100,000. It specifies that individuals who meet these requirements may resolve their potential liability, provided they are not excluded parties and did not vote against the reorganization plan.
Furthermore, the filings indicate that the bankruptcy administrators expect this resolution to remit 27.5% of the withdrawn funds by the end of this month.
What Does The Filing Say?
An essential undertaking for individuals interested in achieving a resolution is to submit the required form by January 25 formally. This form serves as an indication of their dedication to fulfilling their obligation to remit the settlement payment.
Furthermore, the filing states that account holders who opt for settlement shall receive a comprehensive release, including distributions that comply with the reorganization strategy. On the other hand, those who fail to settle their accounts within the specified time risk having their withdrawal preferences promptly disclosed and addressed by administrators.
Such entities may face legal actions that will revoke the preferences bestowed upon them throughout the specified period. The filing explicitly designates the Litigation Administrator as the party entrusted with managing unresolved Withdrawal Preference Exposure matters by January 31, 2024.
In the event of the Effective Date expiration, there will be further actions to resolve the aforementioned unsettled matters. Recall that Celsius administrators granted eligible participants access to withdraw a fraction of their crypto holdings two months ago. This event signifies the initiation of a subsequent stage in the crypto lender’s management of its bankruptcy issues.
Celsius’ Post-Insolvency Strategy
Furthermore, Celsius has implemented an active unstaking approach, withdrawing part of its ETH holdings to expedite the distribution of funds to its creditors. According to recent data provided by Nansen, 20.3% of current withdrawal requests comprise 112,037 Ether (ETH), which is estimated to be worth $266 million.
This action is consistent with Celsius’s dedication to administering its assets to creditors effectively to fulfill its obligations. The approach mentioned above, which underwent a final review in December by the presiding judge supervising the bankruptcy proceedings, was sanctioned with a focus on reorganization.
This strategic reorganization highlights Celsius’s ability to adjust and find practical solutions amid the intricacies of its bankruptcy issues. Furthermore, the crypto lender’s strategic reorientation towards Bitcoin mining aims to maximize resource utilization.
It also aims to explore alternative value-generating opportunities and ease the impacts of the bankruptcy on its stakeholders.
