Crypto lender Celsius has revised its bankruptcy filing and proposed a reorganization plan that seeks to convert all altcoins from customer accounts, with the exception of Custody and Withhold accounts, into Bitcoin and Ether. This move is intended to address rising regulatory concerns and maximize the value of its assets, beginning on July 1st.
However, the proposal may face opposition from borrowers, as pointed out by David Adler from McCarter & English law firm. The debtor, Celsius Lending, is demanding the repayment of loans but has no intention of fulfilling its contractual obligation of returning collateral to the borrowers.
Celsius has filed for permission to appoint Chris Ferraro as the foreign representative in connection with the English Court’s Cross Border Insolvency Regulations (CBIR) for the United Kingdom. This will safeguard the company’s assets in the UK, allowing the United States Chapter 11 to be recognized as the “foreign main proceedings” in order to organize a global resolution.
The reorganization plan involves treating “Retail Borrow Claims” through the “Set Off Treatment.” Losses not offset against income can be carried over and offset against income in later years. However, this proposed “treatment” violates numerous consumer lending laws, and the ad hoc Borrower group is expected to oppose the plan.
Celsius’ restructuring plan follows a successful acquisition deal with Fahrenheit consortium, which comprises venture capital firm Arrington Capital and miner US Bitcoin Corp. At the time of the acquisition, Celsius assets were estimated to be worth approximately $2 billion. Under the new deal, the new company is expected to receive about $450-$500 million worth of liquid cryptocurrency, and US Bitcoin Corp plans to construct a 100-megawatt Bitcoin mining plant.
Regulatory concerns have been on the rise in the crypto industry, and Celsius’ proposed plan may face hurdles if borrowers object to the repayment demands without the return of their collateral. As the reorganization progresses, the impact on the industry and how it will affect regulations and customer trust remains to be seen.
Source: Cointelegraph
