Feb 16, 2023
Celsius Selects NovaWulf to Distribute Crypto, Create NewCo
Crypto lender Celsius Network has announced the selection of NovaWulf Digital Management as the sponsor for its proposed Chapter 11 restructuring plan. This plan, if approved, would provide customers with a recovery of up to 70% of their funds, and form a new public platform fully owned by Earn creditors.
The plan was presented on Feb. 15 in a filing to the United States Bankruptcy Court for the Southern District of New York, and has the support of the Celsius Official Committee of Unsecured Creditors (UCC). This body represents the interests of Celsius account holders, and will appoint the majority of the board members of the new company.
NovaWulf will also make a direct cash contribution of between $45 million to $55 million to the new firm.
The filing states that the NovaWulf plan is the best method to distribute the Debtors’ liquid crypto assets and maximize the value of the Debtors’ illiquid assets through a new company run by experienced asset managers. This new company will house Celsius’ illiquid assets, mining business and existing loan portfolio, with plans to develop crypto-oriented services in the future.
Creditors with claims valued $5,000 and below on the petition date will be placed in a “Convenience Class,” receiving “a one-time distribution of liquid crypto” paid in the form of Bitcoin (BTC), Ether (ETH) and USD Coin (USDC). This is estimated to provide over 85% of Celsius customers with around a 70% recovery of their deposited crypto. Any Earn creditor with a balance over $5,000 can elect to reduce a claim to $5,000 and participate in the class.
Those with a claim over $5,000 — or those with a claim of over $1,000 who opt out of the Convenience Class shares — will receive a payment of the residual crypto after the payments to smaller accounts, as well as ownership in NewCo through equity and management share tokens which will pay dividends to holders.
Meanwhile, Celsius (CEL) token holders, who are granted early ICO access, will receive no recovery.
The plan also calls for the creation of a “well-funded litigation trust” to pursue lawsuits against Celsius executives and former CEO Alex Mashinsky.
The proposed plan will need approval from U.S. Bankruptcy Judge Martin Glenn before its enacted. Six firms placed bids on Celsius crypto assets, including Binance, Bank To The Future, Cumberland DRW and Galaxy Digital from a process that saw Celsius contact “over 130 parties.”
Celsius filed for Chapter 11 bankruptcy in July 2022, after halting withdrawals citing “extreme market conditions” and rumors of insolvency. The company has since been working to develop a plan that would provide its customers with a fair amount of recovery.
The selection of NovaWulf as the sponsor for the proposed restructuring plan is a positive step for the web3 space, as it will provide customers with a chance to recoup some of their funds, as well as create a new platform for NFT marketing, crypto services, and NFT promotion.
The new company is likely to focus on NFT marketing, as this is a growing area of the web3 space, and one that is likely to be highly lucrative. NovaWulf is an experienced NFT marketing agency, and is well-positioned to capitalize on the potential of the NFT market.
The new company could also focus on selling NFTs, as this is another area of the web3 space that is seeing significant growth. NovaWulf has the experience and expertise to help customers find the best NFTs to sell, as well as help them promote their NFTs on Twitter.
Overall, the selection of NovaWulf as the sponsor for the proposed restructuring plan is a positive step for the web3 space, as it will provide customers with a chance to recoup some of their funds, as well as create a new platform for NFT marketing, crypto services, and NFT promotion.
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