Celsius seeks to convert alts to Bitcoin and Ether as part of reorganization plan

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Defunct crypto lender Celsius has reviewed its bankruptcy filing, pending approval from a New York bankruptcy court after a successful acquisition deal with crypto consortium Fahrenheit. The crypto lender filed its reorganization plan on June 15.

Under the revised plan, Celsius will convert all client altcoins, except Custody and Withhold accounts, to Bitcoin (BTC) and Ether (ETH) starting July 1.

The new plan of reorganization proposes to process retail borrower claims through offset processing. The term compensation treatment refers to the comparison of losses against profits in a given year. Losses that are not deducted from income can be carried forward and deducted from income in subsequent years. A Twitter user explained how the offset processing would work for borrowers depending on what part of the loan they paid back:

David Adler of law firm McCarter & English tweeted that Celsius’s restructuring proposal could face opposition from borrowers. He noted that the debtor (Celsius) is demanding repayment of the loans, but has no intention of fulfilling its contractual obligations, such as returning the collateral to the borrowers. That could be something borrowers would object to, he added.

This proposed treatment violates all consumer lending laws (state, federal) and the Ad Hoc Group of Borrowers will oppose this plan.

Additionally, Celsius has sought permission to appoint Chris Ferraro as a foreign representative in a cross-border insolvency settlement from UK courts in the UK. In this way, the company’s UK assets would be protected and US Chapter 11 would be recognized as the foreign primary proceeding for arranging a global resolution.

Related: Celsius Adds Over 428,000 stETH to Extended Lidos Withdrawal Queue

On May 25, crypto consortium Fahrenheit, which includes venture capital firm Arrington Capital and miner US Bitcoin Corp, won the bid to acquire Celsius’s assets. At the time, Celsius’ assets were estimated at around $2 billion. Under the new deal, the new company is expected to receive around $450.5 million in liquid cryptocurrency, while US Bitcoin Corp plans to build a 100-megawatt Bitcoin (BTC) mining facility.

Celsius suspended withdrawals on June 13, 2022, after the company became entangled in bad investments and crypto-contagion following the collapse of the Terra ecosystem.

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