Celsius Saga Updates: Legal Battle Continues as Debtors File Motion to Enforce Automatic Stay 

Crypto Regulation
Celsius Saga Updates: Legal Battle Continues as Debtors File Motion to Enforce Automatic Stay 

Celsius Network troubles continue as court proceedings continue today as the Court issued a notice of hearing Debtors’ motion to enforce the automatic stay and for civil CONTEMPT2. 

Latest Court Filings

A filing released today said; 

“Please take notice that a hearing on the debtors’ motion, pursuant to sections 105(A), 362, 9014, and 9020 of the bankruptcy code, to enforce the automatic stay and for civil contempt (The “motion”) Will be held on october 20, 2022, at 10:00 A.M., prevailing Eastern time (The “hearing”).”

This notice of Hearing comes after the Debtors filed a motion to enforce the automatic stay for civil contempt. According to the debtors’ motion, Core Scientific has violated the automatic stay provisions of 11 U.S.C. § 362(a).

According to the motion, the Debtors Celsius Mining L.L.C. already informed Core Scientific of those violations, but the latter refused to comply. Core Scientific violations include refusing to perform contractual obligations, threats to terminate agreements “until Celsius pays its pre-petition obligation,” and adding improper surcharges. 

Owing to those violations, Celsius requests the Court to enforce the automatic stay order. The Debtors claim that the Court must hold Core Scientific in contempt and violation and direct them to perform under its Agreement with Debtors.

Moreover, the Court should order Core Scientific to return “any improperly invoiced amounts and cease any collection efforts for “Power Costs Pass-through” charges.” Debtors also want the assessment of appropriate damages for Core Scientific’s civil contempt, including costs associated with attorney fees. 

Texas State Agencies Object Celsius Plan to Sell Stablecoins

In another court filing earlier today, Texas state agencies objected to plans by Celsius network to sell off its stablecoin holdings and use the funds to pay for ongoing operations. On September 16, Celsius asked the Court for authority to sell its stablecoins to generate liquidity to fund its operations. The filing states in part; 

“The Texas State Securities Board (the “S.S.B.”) and the Texas Department of Banking (the “D.O.B.”) (together, “Texas”), by and through the Office of the Texas Attorney General, hereby files this Objection (the “Objection”) to the Debtors’ Motion Seeking Entry of an Order (I) Permitting the Sale of Stablecoin in the Ordinary Course and (II) Granting Related Relief [D.E. 832].” 

According to the state’s objection filing, Celsius asks for “troublingly broad permission to sell assets insufficiently defined for purposes that are also insufficiently defined.” The Hearing on the stablecoin sale is scheduled for October 6 in New York. Currently, Celsius holds different stablecoins with a total value of $23 million.

Bankruptcy Examiner was Announced Today

Meanwhile, as the determination of the motion is set, today, a U.S. Trustee announced a new Celsius bankruptcy examiner, charged with probing the company. A tweet by @DavidJAdler199, a Bankruptcy Partner at McCarter & English, L.L.P., earlier today said; 

#CelsiusNetwork #CelsiusBankruptcy Breaking News — Shoba Pillay from Jenner & Block has been appointed as the examiner.”

According to reports, the U.S. Trustee requested the Court to approve the appointment of Shoba Pillay, a former data prosecutor and a stakeholder of the law firm Jenner and Block.