Celsius Large

Celsius company, one of the largest cryptocurrency lenders, has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York, a month after freezing its customer’s withdrawals as the global cryptocurrencies values crashed.

A July 14 statement issued by the Celsius company on Twitter stated that the bankruptcy status would provide the Company with the opportunity to stabilize its business and consummate a comprehensive restructuring transaction that maximizes value for all stakeholders.”

The company, however, had gathered more than $20 billion in assets by offering interest rates as high as 18% to its customers who deposited their cryptos before halting the withdrawals in mid-June due to ‘extreme market conditions.’

The Hoboken, New Jersey-based company’s Chapter 11 Bankruptcy in the federal court filing, listed between $1 billion and $10 billion in assets, the same amount in liabilities, and more than 100 000 creditors.

The filing allows a company to continue operations while it continues to restructure its business. This is usually executed by proposing a plan of reorganization to be approved by creditors and overseen by a legal team.

The Celsius company has requested to continue operating since it stated that it had $167 million cash in hand to support the ongoing operations in the meantime while the restructuring process continues.

“This is the right decision for our community and company,” CEO Alex Mashinsky

A statement by the Members of the Special Committee of the Board of Directors Stated,

Today’s filing follows the difficult but necessary decision by Celsius last month to pause withdrawals, swaps, and transfers on its platform to stabilize its business and protect its customers. Without a pause, the acceleration of withdrawals would have allowed certain customers—those who were first to act—to be paid in full while leaving others behind to wait for Celsius to harvest value from illiquid or longer-term asset deployment activities before they receive a recovery.”

Alex Mashinsky who founded the Celsius company in 2017 confirmed that this is the “right decision for the community and the company”. Mashinsky further added “We have a strong and experienced team in place to lead Celsius through this process. I am confident that when we look back at the history of Celsius, we will see this as a defining moment, where acting with resolve and confidence served the community and strengthened the future of the company.”

A few days ago, Celsius switched its restructuring lawyers with Kirkland & Ellis LLP serving as legal counsel, Centerview Partners serving as a financial advisor, and Alvarez & Marsal serving as restructuring advisor to Celsius.

According to the blockchain and tracker Zapper, Celsius paid back more than $900 million of its debts in decentralized Applications Aave, Compound, And Maker Dao over the last month. On June 13, the company announced a charge for collateral of 2,000 Ether for the advancement of a cash loan with Symbolic Capital Partners Ltd., according to the filing. A similar charge, for 2,545.25 Ether, was made in relation to Symbolic on June 11, the filing further revealed.

However, Celsius company is among the many crypto lending firms which have faced a similar tragedy amid a sharp sell-off in cryptocurrencies. Other centralized lenders such as Vauld halted withdrawals, The Voyager Digital Limited filed for bankruptcy while Three Arrows Capital(3AC)was put into insolvency proceedings in the British Virgin Islands which a few days ago filed for Chapter 15 Bankruptcy.

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