Celsius UCC Makes Progress while Case Awaits Hearing

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Crypto Regulation
Celsius UCC Makes Progress while Case Awaits Hearing

The Selected Unsecured Creditor’s Committee mandated with championing the rights of Celsius unsecured creditors have chosen the White & Case LLP – Pesce & Colodny law firm to represent their pleas. This happened a day after the Celsius second hearing was rescheduled for August 16, 2022, at 2.00 pm ET.

Possible Conflict of Interest?

In a Twitter thread, some creditors have voiced their concerns regarding Paul Weiss’ bid to represent UCC, claiming that this may pose a conflict of interest. One Otisa502 tweeted, “Paul Weiss shouldn’t have applied to be the UCC’s representative. They look to be in conflict of interest (if not actually are) since Ron Deutsch, the general counsel for Celsius previously worked for Paul Weiss.”

In Paul Weiss’ defense, another user said, “Past employment with another company is not a conflict of interest. Knowing the insider tactics of the opposition is helpful, in my opinion. No law practice would be able to represent anyone if there was a conflict here.”

However, the issue of conflict of interest was resolved as the UCC chose White & Case LLP company to advocate for unsecured lender’s rights.

Some Creditors Propose a Chapter 7 Liquidation

Some creditors would prefer the possibility of putting the potential entire haircut to depositors from a Chapter 7 liquidation on the table.

In a Chapter 7 bankruptcy, assets may be liquidated to pay creditors. This would put priority on unsecured creditors who are paid off first, followed by secured debt and nonpriority unsecured debt. Typically, Chapter 7 involves filing paperwork and having the trustee review your assets.

What Are the Mandates of a UCC?

A creditors’ committee has a wide range of rights and obligations, including developing a restructuring strategy for insolvent businesses or determining whether they should be liquidated.

A creditors’ committee’s job is to ensure unsecured creditors, who could only be owed minor amounts, are nevertheless represented in bankruptcy proceedings. A U.S. bankruptcy trustee (appointed in more complex cases through Chapter 11 procedures) is responsible for selecting the members of a creditors’ committee from among the 20 largest unsecured creditors with claims against the debtor in question.

Serving on a creditors’ committee entails a substantial time commitment, the potential for extensive travel, and the possibility of making choices that might be at odds with one’s or employer’s interests. Although expenditures may be repaid, such work is unpaid.

A creditors’ committee’s job is to ensure unsecured creditors, who could only be owed minor amounts, are nevertheless represented in bankruptcy proceedings. A U.S. bankruptcy trustee (appointed in more complex cases through Chapter 11 procedures) is responsible for selecting the members of a creditors’ committee from among the 20 largest unsecured creditors with claims against the debtor in question.

Celsius Seeks to Re-Hire CFO

Bankrupt lending company Celsius is seeking Ex-CFO Rod Bolger due to his expertise in the debtor’s business. They have offered to pay him $92,000 monthly, prorated over a minimum of six weeks.

According to a motion submitted to the Southern District of New York, the corporation claims that Bolger is necessary to assist it as an advisor as it navigates the bankruptcy proceedings.

Wayne Jones

Wayne is an all-rounded cryptocurrency writer who has written for several publications in the fintech industry. Having graduated from the University of Essex Colchester, he developed a passion for blockchain technology and has been curious about how the blockchain can modify the traditional financial industry.