Celsius Network secures court approval for bankruptcy-related plans, partnering with Fahrenheit to create “NewCo” while preparing for potential asset wind-down with BRIC.
Key Points
- Celsius Network gains court approval for Disclosure Statement in bankruptcy case.
- “NewCo” entity to be created through Chapter 11 Plan in collaboration with Fahrenheit.
- Account holders to receive Liquid Cryptocurrency; illiquid assets managed by NewCo.
- Backup bid with BRIC in place for orderly wind down if needed; stakeholders can find details on official website.
Approval for Celsius Network’s Disclosure Statement has been granted by the United States Bankruptcy Court for the Southern District of New York. The following are the key details of this development.*
Celsius Network LLC, known as “Celsius,” recently completed a Court-approved auction process in May 2023. After the auction, Fahrenheit, LLC, referred to as “Fahrenheit,” emerged as the winning bidder.
#CELSIUS HEARING LIVE: #SEC making their appearance for the record. K&E giving an update on disclosure statement objections. UST & debtors will move objections to confirmation statements. Earn Ad Hoc amended reservation of rights. K&E say $CEL should not be a disclosure issue.
— Simon Dixon (@SimonDixonTwitt) August 14, 2023
Chapter 11 Plan: Establishing NewCo
Celsius has proposed a Chapter 11 Plan, commonly known as the “Plan,” which involves collaboration with Fahrenheit.
The aim is to create a new entity named “NewCo” that will receive the necessary capital, management expertise, and technology.
The Creditors Committee, composed of unsecured creditors from Celsius’ Chapter 11 cases, will nominate a significant portion of NewCo’s Board of Directors.
Chris Ferraro, Celsius’ Chief Restructuring Officer & Interim Chief Operating Officer, expressed the company’s dedication to achieving the best outcome for its customers and creditors.
David Barse and Alan Carr, members of the Board’s Special Committee, highlighted the significance of the Disclosure Statement’s approval in transitioning Celsius’ assets to NewCo.
Solicitation Package: Voting Details
Celsius has sent a Solicitation Package to eligible creditors, including the Disclosure Statement, Plan, and voting instructions.
Votes must be received by Stretto, the company’s claims and solicitation agent, by 4 p.m. Eastern Time on September 22, 2023. A Court hearing to review the proposed Plan is scheduled for October 2, 2023.
Once the Plan is confirmed, Celsius expects to promptly distribute Liquid Cryptocurrency to its account holders. NewCo will manage Celsius’ illiquid assets, such as its institutional loan portfolio, mining business, and alternative investments.
Account holders will hold the entirety of the new equity in NewCo, although this may be subject to dilution by equity distributed to Fahrenheit as management fees.
Fahrenheit’s Commitment to a Successful Transition
Steve Kokinos from Fahrenheit Holdings expressed optimism about the ongoing developments and reaffirmed Fahrenheit’s commitment to ensuring a successful transition and a promising future for NewCo.
Celsius has a backup bid in place with the Blockchain Recovery Investment Consortium (BRIC) to facilitate an orderly wind down of its remaining assets if necessary.
Concluding Thoughts
Stakeholders seeking more details about the Chapter 11 filing, including the Plan and Disclosure Statement, can visit the official website or contact Stretto.
Celsius is receiving advisory services from Kirkland & Ellis LLP, Centerview Partners, C Street Advisory Group, and Alvarez & Marsal.
The Creditors Committee is being assisted by White & Case LLP, Perella Weinberg Partners, and M3 Partners. Fahrenheit, LLC is represented by Brown Rudnick LLP, and the BRIC has engaged Willkie Farr & Gallagher LLP for legal counsel.
