Court Approves Celsius Plea To Sell Mined BTC To Fund Operational Expenses
As per recent reports, a US bankruptcy court has given the crypto lending platform Celsius the green light to sell its mined Bitcoin. The company told the court that it needed the funds for its operational expenses.
US Court Grants Celsius’ Request to Sell Mined BTC
Although the court has given Celsius the go-ahead to sell its mined Bitcoin, the approval did not go well with the US Trustee assigned to the case.
According to reports, the parties involved in the crypto lender’s bankruptcy court proceedings met to deliberate on several matters. Most of the motions were undisputed, and Martin Glenn, the US Bankruptcy Court Chief Judge in New York’s Southern District, granted them swiftly.
Some of the motions include the ability of the firm to pay some critical vendors, fees and taxes, insurance fees, legal counsel, and utilities for business operation.
However, some of the motions raised faced severe scrutiny in court. One of them is the company’s motion to sell its Bitcoin. Shara Cornell, a US Trustee, objected to the company’s appeal.
Before Celsius filed for bankruptcy in July, the company wanted to expand its business more into the mining sector. As per the court filing, the company’s operation generated about 14 BTC daily.
Celsius to Run Out of Funds in October
Before now, Celsius had covered some of its expenses in 2021 using mined BTC, which totaled 3,114 BTC. The expenditures were related to its mining expansion.
During the first legal hearing in July, several interim motions contained allowances for expenditures associated with a mining plant still being built.
Celsius has in the past pushed the notion that its mining activities will cover a sizeable portion of its debts. This includes the $750 million it gave to its mining arm.
In the past week, these expenses and debts have increased. A recent filing showed that Celsius would run out of funds by October. However, the legal team said it has some lenders that would help the firm after that point.
In July, Celsius halted withdrawals due to cascading market circumstances and accompanying liquidity issues. The company then filed for Chapter 11 bankruptcy. At that point, it stopped using the BTC it had mined.
Now, it is looking for how to sell them to cover some expenses primarily related to expanding its mining operations.
US Trustee Express Doubt Over the Usage of the Funds
The US Trustee and creditor committee reservations and doubts about an earlier form of the motion. It wasn’t evident whether Celsius intended to utilize this BTC for lending or trading operations to make more money.
However, the final version of the bill allayed these issues. Still, Cornell and Glenn questioned the idea’s plausibility, citing that the mining firm is now projected to have a negative cash flow.
According to Kirkland & Ellis’ attorneys, this is because the facility is still under construction. However, Glenn approved the request of Celsius, saying it is business worthy.
Meanwhile, both parties would meet on September 1st for another court proceeding. Before that time, the creditor committee would meet on August 19th by phone.
