Celsius requests court to prolong its exclusivity period before submitting reorganization plan

Celsius requests court to prolong its exclusivity period before submitting reorganization plan

Celsius filed a request in court for an extension on the deadline for reorganization. The firm claims it needs more time to complete the plan because reorganization is ‘complex’. According to a Celsius Twitter post on November 10, 2022, the company announced that it had submitted a motion to a U.S. court requesting more time to develop a reorganization plan.

Celsius’ continued bankruptcy troubles

The troubled crypto firm froze billions of dollars in customer funds in June as it continues to face bankruptcy proceedings.

Celsius believes that it’s the best time to request an extension. The company wrote, “This is the period when Celsius has the exclusive right to submit a reorganization plan.”

The troubled crypto lender claims that it has its stakeholders‘ interests at heart and that they need a profitable way forward despite the complexity involved.

Celsius said in the Twitter post:

“We are making substantial progress towards the determination of a value-maximizing path forward, but this important work is complex, and it is critical for us to be as rigorous as possible in the interest of all stakeholders.”

The digital asset lending firm halted customer withdrawals, and a month later, in July, the firm filed for Chapter 11 bankruptcy in the Bankruptcy Court of the Southern District of New York.

Once a company files for Chapter 11 bankruptcy, it can continue operating while meeting its obligations to indebted parties. A company like Celsius does this by proposing a plan of reorganization to have approval from creditors, and it’s usually overseen by a legal team.

Celsius’ bid for an extension initiated four months of exclusivity. It allows the firm to develop a reorganization plan outlining how it will pay off its obligations. Celsius claims that it owes more than $5.5 billion.

Celsius’ “period of exclusivity”

The company’s initial exclusivity period is about to expire, and that’s why it is requesting an extension. A U.S court has the power to shorten or lengthen the exclusivity period. 

Celsius has to propose its reorganization independently and involve procedures for the sale of assets. However, the firm said important legal questions and issues must be resolved before its cases can reach a conclusion.

Celsius is mainly focused on a value-maximizing resolution; however, its case ends. The firm said:

“Any interruptions could undermine the very goal all parties in our cases share: expeditiously moving these chapter 11 cases to a value-maximizing resolution. We would recognize the delays and costly disruption if competing plans were to be proposed.”

As the company continues to battle with bankruptcy, it still has faith in its products and is certain that it will come up with a decisive plan. Celsius said:

“We plan to continue advancing our productive conversations with important stakeholders in our cases to put forward a strong and comprehensive plan.”

The troubled digital asset lender is among several crypto companies experiencing bankruptcy caused by the market fall. FTX exchange and its sister company Alameda Research are facing the ‘road to insolvency’ talk featuring other significant financial woes. 

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