A U.S. bankruptcy judge, Martin Glenn, has approved Celsius Network to establish a new Bitcoin mining company owned by creditors. The decision stems from the Orderly Wind Down / MiningCo transaction, as sanctioned by the Court and detailed in an opinion and order issued by Judge Glenn. The ruling permits the debtors to initiate liquid cryptocurrency distributions on the effective date.
The complete opinion can be accessed here: Link to Opinion.
The Official Committee of Unsecured Creditors representing Celsius Networks expressed confidence in the trajectory of the bankruptcy process, stating, “We believe the debtors remain on track for the effective date to occur at the end of January.” Simon Dixon, founder of Bank of the Future, shared his optimism, saying,
Happy Holidays, Celsius Creditors. After a year and a half, the OWD plan has been approved with no revote. In January 2024, we should have an effective date before Bitcoin passes $54k, locking in the upside of all assets for creditors. Judge Glenn ruled.
As Celsius transitions into ‘MiningCo,’ an imminent rebranding announcement is anticipated.
The Manhattan-based court’s decision allows Celsius to deviate from a previously approved bankruptcy plan, justified by the assurance that creditors and customers would not be at a disadvantage under the new restructuring. Judge Glenn emphasized that the flexibility inherent in the plan approved in November enabled Celsius to pivot to an alternate strategy after encountering challenges with the U.S. Securities and Exchange Commission.
The collapse of one of the leading crypto firms was attributed to problematic decisions and the then-prevailing market conditions. To recall, Celsius’ precarious condition was exacerbated by LUNA’s fiasco coupled with an overleveraging issue and the poorly executed WBTC and ETH/stETH positions that led to a total lockdown of their platform.
The crypto firm made headlines again after kicking off an auction on April 22, as it looked for a buyer to save its bitcoin mining and crypto lending operations from bankruptcy.
Celsius Eyes Early 2024 Exit From Bankruptcy
The subsequent reorientation after SEC’s rejection also led Celsius to sever ties with external bidders initially selected to manage the new company. Consequently, mining company US Bitcoin Corp., founded by Hut 8’s Asher Genoot, assumed a central role in overseeing the newly established creditor-owned mining business.
Despite objections from some creditors and the U.S. Department of Justice’s bankruptcy watchdog, who argued for a new vote, Judge Glenn ultimately approved the change without requiring additional creditor approval. The crypto lending platform expects to emerge from bankruptcy in early 2024.
