US Court postpones Celsius second hearing

Crypto lender Celsius recently announced the postponement of its bankruptcy second hearing. Celsius made the revelation in a Twitter post. Reportedly, the postponement manifested owing to the plea for more time by the unsecured creditor’s committee. The hearing will now unfold on August 16.

The crypto lender has been battling a liquidity crisis as a result of the inability to meet its financial obligations. As part of the measures to manage the crisis, it reportedly instituted a filing for bankruptcy protection in July. 

Celsius filed with the United States Bankruptcy Court for the Southern District of New York in line with the proceedings of the US Bankruptcy Code. According to findings, the protocol intends to harness the filing in stabilizing its operations. Accordingly, the troubled company was granted a first hearing in the same month. 

Some customers wrote to the Court to accuse Celsius of fraud. These customers insisted that the firm’s inability to pay their funds has caused them emotional damages. The customers urged the U.S court to compel the repayment of the debts by the crypto lender. During the hearing, Judge Glenn Martin directed the initiation of the unsecured creditor’s committee by Celsius. 

During the first hearing, Celsius informed the Court that it owed a debt of $4.7 billion. Celsius also estimated the value of its total assets at $3.5 billion. According to findings, the asset’s value, which was about $4.3 billion, reduced to $3.5 billion owing to the general decline in the price of crypto assets. According to the lender, the debt owned is greater than the overall value of its assets.

The Court issued several relief motions to Celsius. Judge Martin recommended that Celsius expend $5.2 million to maintain its mining rigs. The court notes that the crypto lender can settle its loans by investing in its bitcoin mining operations. As of today, Celsius possesses over 40,000 mining equipment. 

Additionally, the United States Bankruptcy Court allowed the protocol to increase its mining equipment to over 100,000 before the end of 2023. As stipulated by the court, the gains Celsius incurred from the mining operations will be used to settle customers’ debts. The judge also announced August 10 for the second hearing of the filing. However, the postponement means the hearing will take place on August 16.

The protocol recently added new directors to aid its recovery. According to reports, the new directors are David Barse, founder and CFO of XOUT Capital and DMB Holdings,  and the Founder and Alan Carr,  managing member of Drivetrain. Celsius CEO, Alex Mashinsky, hinted that the protocol now possesses a “strong and experienced team in place to lead Celsius through this process.”

Related

• BREAKING NEWS: Celsius is Filing for Chapter 11 Bankruptcy ‘imminently’
• Celsius used investor funds for high-risk trades triggering liquidity issues
• Celsius appoints a new legal team to navigate liquidity crisis