Celsius proposes crypto-currency token issuance as part of restructuring plan

According to reports, Celsius Network LLC may issue a bankruptcy crypto-currency token to pay off its creditors. The move is part of a larger “collection company” set up by the failed crypto-currency lender to rebrand itself as a new publicly traded company.

After receiving several unconvincing acquisition offers, Celsius’ lawyers believe liquidation would generate less cash than reorganization.

Celsius plans to launch faster crypto token in bankruptcy

Celsius has announced that its plans for a reorganization and a digital bankruptcy token may come to fruition in “a few months“The plan is subject to regulatory approval. According to the bankrupt company’s attorney, Ross M. Kwasteniet, creditors would benefit more from this plan than from attempts to sell hard-to-liquidate assets at depressed prices.

Under the recently unveiled plan, creditors whose stranded assets exceed a certain threshold would receive a one-time token. This token, called the Asset Share Token (AST), would reflect the value of these customers’ assets. In addition, AST holders could either keep their tokens, which would entitle them to periodic dividends, or sell them on the open market. Celsius also has repayment plans in place for the rest of its customers outside the threshold, which is between 60 and 70 percent of the overall customer base. According to the New Jersey-based bankrupt crypto lending company, these customers would receive a one-time distribution in liquid digital currencies. According to Kwasteniet:

“[La distribution] Would be at a discount. We don’t envision a full recovery, but it’s a significant recovery, your honor. It would be a one-time distribution in crypto cash – call it Bitcoin, Ethereum, or stablecoins. Something that has, you know, easily exchangeable, easily verifiable market value for anyone who has claims below a certain threshold.”

Kwasteniet also stated:

“[Les déposants de Celsius] all have something in common – they all deposited crypto, and they all have a claim for the return of crypto, and we are focused on developing a plan that treats them equally … Earn customers, we think, are going to be treated equally.”

In addition, Kwasteniet explained that these customers would be entitled to a significant return of value.

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The payment threshold must be determined

Celsius negotiated with numerous creditor groups on how to establish the new corporation and the token payment plan. However, the company’s lawyers did not specify the payment threshold. According to Kwasteniet, Celsius is still discussing the dollar threshold amount with the unsecured creditors committee (UCC). The company’s attorney also added that it would file court documents detailing its plan later this week.

As part of its restructuring and reinvention plans, Celsius attorneys have also asked the court for permission to sell certain unused mining equipment. In addition, the company has previously argued that its wholly-owned mining subsidiary, Celsius Mining, could eventually become profitable again.

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Celsius’ bankruptcy case, Celsius Network LLC, 22-10964, is proceeding in the U.S. Bankruptcy Court for the Southern District of New York, based in Manhattan.

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