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Celsius submits chapter 11 reorganization plan centered on NovaWulf deal

celsius-submits-chapter-11-reorganization-plan-centered-on-novawulf-deal
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Celsius submits chapter 11 reorganization plan centered on NovaWulf deal

Celsius Network, the bankrupt cryptocurrency company, filed its chapter 11 reorganization plan in the late hours of March 31, 2023, built around NovaWulf Digital Management, an SEC-registered investment manager.

Celsius submits chapter 11 restructuring plan

The announcement was made by the Celsius Official Committee of Unsecured Creditors, pointing this as a significant step in the company’s efforts to restructure its financial obligations, as it is currently undergoing Chapter 11 bankruptcy proceedings in the U.S. Bankruptcy Court. The plan was selected by Celsius, with NovaWulf as the sponsor, but is yet to be approved by the Bankruptcy court. 

Celsius will release the disclosure statement on April 12.

NovaWulf is an investment firm recognizing blockchain tech’s and digital assets’ potential to transform financial markets and society. They aim to establish themselves as the leading investment firm for the digital space and its associated infrastructure.

Under the reorganization plan, Celsius will be managed by NovaWulf, with Figure Technologies as its licensing and blockchain partner. Figure Technologies offers financial services to banks and institutions utilizing the speed and efficiency of blockchain tech. Under the NovaWulf deal, the goal is to cash out clients with less than $5,000 in digital assets. Meanwhile, large account holders will take over the management of the crypto lender. Celsius will then be free to exit from bankruptcy as early as June.

In general, the yet-to-be-approved chapter 11 restructuring plan is divided into several key sections that provide for the treatment of various stakeholders and the procedures for the allowance of claims and resolving disputed claims. It proposes the creation of a new public-reporting, regulatorily compliant entity called NewCo. NewCo would manage Celsius’ illiquid assets, which include its mining business, retail and institutional loan portfolios, staked cryptocurrency, and other alternative investments.

NewCo’s common equity will be 100% owned by creditors at emergence and will be governed by a board of directors, most of which will be appointed by creditors. A litigation administrator will preserve and pursue specific debtors’ claims and causes of action to benefit the General Earn Creditors.

A vital aspect of the plan is distributing a significant amount of Celsius’ liquid cryptocurrency to account holders on the plan’s effective date. This move is critical in restoring faith in Celsius’ customer base, which had been hit hard by the company’s bankruptcy proceedings and its subsequent suspension of withdrawals, swaps, and transfers on customer accounts.

Hope amidst the bankruptcy storm

While the reorganization plan provides much-needed clarity and transparency to Celsius’ stakeholders, it is still a complex legal document that must be read to understand its implications fully. Thus, creditors were legally advised to read and rely on the plan rather than any summary or statement provided by Celsius or its affiliates.

The plan also contains release, exculpation, injunction provisions, and certain conditions that must be satisfied before the plan can become effective and distributions can be made.

Filing the reorganization plan for the NovaWulf deal provides a clear roadmap for the company’s future and allows it to move forward confidently. While the bankruptcy proceedings have undoubtedly been a challenging time for the company, the reorganization plan offers a glimmer of hope and the possibility of a brighter future.