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Defunct crypto lender Celsius aims to convert altcoins to Bitcoin and Ethereum, streamlining operations and reducing costs. The company’s revised bankruptcy filing follows an acquisition deal, while objections and scrutiny surround its reorganization plan.
Celsius’s Reorganisation Plan Will Convert Altcoins to Bitcoin and Ethereum
Celsius, a defunct crypto lender, has submitted a revised bankruptcy filing to a New York bankruptcy court following a successful acquisition deal with the Fahrenheit crypto consortium.
Within their proposed plan, Celsius has sought the court’s approval to convert their entire altcoin holdings into Bitcoin and Ethereum, with the exception of the ones held in Withhold or Custody accounts. The objective of this conversion, scheduled to begin on July 1 following plan approval, is to optimize the value of their cryptocurrency assets.
In this updated plan, Celsius aims to address the claims of retail borrowers through a process known as set off treatment. Set off treatment involves offsetting losses against profits within a given year, allowing losses to be carried over and offset against future income.
The implementation of this treatment will depend on the portion of the loan borrowers have repaid, as explained by a Twitter user.
David Adler, representing Celsius customers, has voiced objections to the proposed reorganization plan. He claims that the plan violates consumer lending laws at the state and federal levels. Adler’s primary objection revolves around the treatment of Retail Borrow Claims, which Celsius plans to address through the Set Off Treatment.
Adler argues that Celsius demands loan repayments without fulfilling its contractual obligations of returning collateral to borrowers, constituting a clear violation of consumer lending laws.
Celsius has come under scrutiny from Adler due to their prolonged failure to communicate with the borrower group. Adler asserts that there is no justification for granting further exclusivity extensions, and Celsius must provide a valid reason to warrant such extensions.
While the plan has been approved by the Celsius Network Official Committee of Unsecured Creditors, opposing parties can still submit written objections electronically. These objections will be reviewed during the June 28 hearing, and they must be submitted by June 26 and attended by the objecting parties for their claims to be considered.
Celsius Streamlines Operations with Altcoin Conversion and Seeks Global Resolution
Celsius’ decision to convert altcoins into Bitcoin and Ethereum is streamlining operations by focusing on the two most popular and valuable cryptocurrencies. This simplification of cryptocurrency management could potentially reduce associated costs.
Additionally, Bitcoin and Ethereum are highly liquid in the cryptocurrency markets, making them easily tradable. By holding these cryptocurrencies, Celsius can navigate the market without concerns about the liquidity of other altcoins.
Moreover, Celsius has made a request to appoint Chris Ferraro as the foreign representative, tasked with protecting the company’s assets in the United Kingdom, in compliance with the Cross-Border Insolvency Regulations of the British court.
The appointment aims to recognize the United States Chapter 11 as the primary foreign proceedings, enabling a comprehensive resolution on a global scale.
The Fahrenheit crypto consortium, including Arrington Capital and US Bitcoin Corp, won the bid to acquire Celsius assets on May 25. The estimated worth of Celsius assets is around $2 billion, and under the new agreement, the new company is expected to receive liquid cryptocurrency worth approximately $450–500 million, while US Bitcoin Corp plans to build a 100-megawatt Bitcoin mining plant.
Celsius temporarily halted withdrawals on June 13, 2022, due to unfavorable investments and the impact of the collapse of the Terra ecosystem.
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