Celsius Floats plans to exit bankruptcy by issuing a new token

A lot has happened in Celsius’ bankruptcy proceedings since the platform originally went under in July.

Between allegations of fraud, arguments that customers (or unsecured creditors, according to the firm) overwrote their cryptos, alleged attempts by the former CEO to flee the country, and more, Celsius’ court case has been a wild ride to get it so say the least. Now the lender’s legal team is arguing that a liquidation would make less money for creditors than a reorganization, which may be true.

However, the restructuring process proposed by Celsius’ legal team relies heavily on printing a new token to “help recovery.”

Plan allegedly suggested by creditors

According to Ross Kwasteniet, an attorney representing the crypto lender in its ongoing bankruptcy proceedings, Celsius’ assets would be difficult to liquidate given current prices. This situation prompted several unnamed company creditors to propose a restructuring plan based on a preliminary newly minted recovery sign, as reported by Bloomberg.

There are some precedents – CoinFLEX, Bitfinex and others have come up with similar ideas. Unfortunately, despite the optimistic language used by these struggling platforms to gloss over the idea, it still creates a character out of thin air while dancing around the theme of what replaces it – lost assets.

According to the court documentsKwasteniet argued that a revived version of Celsius as a “publicly traded company that is properly licensed” would ultimately bring more value to creditors than liquidation, and questioned how the company was licensed prior to its collapse.

Additional documents supporting the proposal are scheduled to be filed next week and put to a vote by Celsius’ creditors before being formally proposed to the judge leading the case.

Tokens to be paid out to creditors with significant claims

According to CelsiusFacts, an anonymous Twitter account covering the company’s lawsuit, the tokens would be distributed to creditors with claims in excess of $5,000.

If the information presented by CelsiusFacts is correct, creditors with assets below $5,000 could withdraw all their assets from the platform. If a creditor demands between $5,000 and $7.5,000, depending on the amount, 95% to 100% of the assets are available for payment. The remaining percentage would be paid out in the recovery token proposed by the lender.

Unfortunately, the proposed plan would not allow withdrawals for those who deposited more than $7.5k at Celsius. Unfortunately, these users would not receive any compensation other than the recovery token.

Further updates to the proposal are reportedly set to be discussed in court next week.

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