- Celsius along with Celsius Official Committee of Unsecured Creditors selected crypto investment company, NovaWulf to sponsor a reorganization plan to emerge from bankruptcy.
- The investment advisory firm will take over the operations of a new company and it is estimated that most clients will recover up to 70% of their funds.
- The plan will distribute liquid cryptocurrency to all account holders, as well as create a litigation trust and provide creditors with common equity in a NewCo that holds illiquid assets such as mining.
Life is like a Ferris wheel, sometimes you are up and sometimes you are down and there comes a time when you are simply not there, because your luck changed and you had to get off the attraction.
The same thing happens in many business areas and the environment of crypto assets is no exception. A clear example of this is the bankrupt cryptocurrency lending company based in Hoboken, New Jersey, Celsius.
Given its current state in which it literally had to “get off the boat” of crypto assets, the firm recently disclosed that chose Novawulf Digital Managementa virtual currency investment company, to be your right hand in terms of shelving and finally closing your bankruptcy case. In this regard, the crypto lender agreed to the purchase plan with NovaWulf after examining various other offers.
It should be noted that this sales plan and reorganization was filed by the Celsius Debtors, thanks to its backing by Celsius’s official committee of unsecured creditors (UCC).
“Last night, Celsius (with the support of the UCC) selected NovaWulf to sponsor a reorganization plan that will distribute liquid cryptocurrency to all account holders, as well as create a litigation trust and provide creditors with common equity in a NewCo with illiquid assets such as mining“.
It is important to say, that the Debtors agreed that NovaWulf was selected, since “provides the best method to distribute Debtors’ liquid crypto assets and maximize the value of Debtors’ illiquid assets through a new company led by experienced asset managers“, according to the presentation.
Creation of a new company
The plan contemplates the creation of a new company that would be managed by NovaWulf and will be focused on servicing debts. As proposed by Celsius, a large part of the creditors will be able to have a single crypto payment, plus the fact that NovaWulf would still make a considerable direct contribution in cash.
The plan states that the firm would contribute between $45 million and $55 million to the new company. Similarly, Celsius also proposed that creditors with major claims should receive shares in the start-up company.
In addition, the new company would prevent debtors from running the risk of assuming significant costs associated with the liquidation of clients’ assets, in addition to the liquidation of the company.
In this regard, C.Elsius estimated that more than 85 percent of his clients will be able to recover about 70 percent of their claims. In addition, Celsius also noted that the new company will have “no involvement or relationship with the founder of Celsius.”
Breakdown of payment of creditors
Under the new plan, creditors with claims of less than $5,000 will be placed in a “Convenience Class,” where they can receive a one-time distribution of liquid crypto. The payment format would be in the form of Bitcoin (BTC), Ether (ETH) and Stablecoin USD Coin (USDC).
For their part, creditors of more than $5 thousand dollars as well as those with at least a thousand dollar claim who decide not to participate in the actions of the Convenience Class, will be able to receive a part of the residual cryptography. The amount to be paid will be determined after the payments of the smallest accounts.
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